Santander Holdings USA (SOV) 10-Q 2024 Q3 Quarterly report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2024

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-16581

SANTANDER HOLDINGS USA, INC.

(Exact name of registrant as specified in its charter)

Virginia (State or other jurisdiction of incorporation or organization)	23-2453088 (I.R.S. Employer Identification No.)
75 State Street, Boston, Massachusetts (Address of principal executive offices)	02109 (Zip Code)

Registrant’s telephone number including area code (800) 493-8219

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols	Name of each exchange on which registered
Not Applicable	Not Applicable	Not Applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑. No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑. No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐	Emerging growth company ☐
Non-accelerated Filer ☑	Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐. No ☑.

Number of shares of common stock outstanding at October 31, 2024: 530,391,043 shares

INDEX

	Page
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023	4
Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2024 and 2023	5
Condensed Consolidated Statements of Comprehensive Income for the three months and nine months ended September 30, 2024 and 2023	6
Condensed Consolidated Statements of Stockholder's Equity for the three months and nine months ended September 30, 2024 and 2023	7
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	8
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	74
Item 3. Quantitative and Qualitative Disclosures About Market Risk	111
Item 4. Controls and Procedures	111
PART II. OTHER INFORMATION	111
Item 1. Legal Proceedings	111
Item 1A. Risk Factors	111
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	111
Item 3. Defaults upon Senior Securities	111
Item 4. Mine Safety Disclosures	111
Item 5. Other Information	112
Item 6. Exhibits	113
SIGNATURES	114
Ex-31.1 Certification
Ex-31.2 Certification
Ex-32.1 Certification
Ex-32.2 Certification
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

SANTANDER HOLDINGS USA, INC., AND SUBSIDIARIES

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about the Company’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words and phrases such as “may,” “could,” “should,” “will,” “would,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “assumes," "goal," "seeks," "can," "predicts," "potential," "projects," "continuing," "ongoing," and similar expressions.

Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date on which the statements are made, these statements are not guarantees of future performance and involve risks and uncertainties which are subject to change based on various important factors and assumptions, some of which are beyond the Company's control. Among the factors that could cause the Company’s financial performance to differ materially from that suggested by forward-looking statements are:

•the effects of regulation, actions and/or policies of the Federal Reserve, the FDIC, the OCC and the CFPB, and other changes in monetary and fiscal policies and regulations, including policies that affect market interest rates and money supply, as well as the impact of changes in and interpretations of GAAP, the failure to adhere to which could subject SHUSA and/or its subsidiaries to formal or informal regulatory compliance and enforcement actions and result in fines, penalties, restitution and other costs and expenses, changes in our business practice, and reputational harm;

•increased credit risk exposure to the extent our loans are concentrated by loan type, industry segment, borrower type or location of the borrower or collateral, and changes in the credit quality of SHUSA's customers and counterparties;

•adverse economic conditions in the United States and worldwide, including the extent of recessionary conditions in the U.S. and the strength of the U.S. economy in general and regional and local economies in which SHUSA conducts operations in particular, which may affect, among other things, the level of non-performing assets, charge-offs, and credit loss expense;

•inflation, interest rate, market and monetary fluctuations may, among other things, reduce net interest margins and impact funding sources, revenue and expenses, the value of assets and obligations, and the ability to originate and distribute financial products in the primary and secondary markets;

•bank failures and actual or perceived adverse developments at other banks, including financial or operational failures and concerns about creditworthiness or the ability of other banks to fulfill their obligations, may lead to decreased customer and investor sentiment regarding the stability and liquidity of banks in general, reduced interest by customers and investors to use banking services and enter into transactions with banks, disruption in the financial markets, increased expenses for banks such as higher FDIC insurance premiums, and increased regulation of banks by supervisory authorities as they seek to manage or mitigate such adverse developments;

•risks SHUSA faces implementing its growth strategy, including SHUSA's ability to grow revenue, manage expenses, attract and retain highly-skilled people, successfully complete and integrate mergers and acquisitions, and raise capital necessary to achieve its business goals and comply with regulatory requirements;

•SHUSA’s ability to effectively manage its capital and liquidity, including non-objection to its capital plans by its regulators and its subsidiaries' ability to continue to pay dividends to it;

•reduction in SHUSA's access to funding or increases in the cost of its funding, such as in connection with changes in credit ratings assigned to SHUSA or its subsidiaries, or a significant reduction in customer deposits;

•adverse movements and volatility in debt and equity capital markets and adverse changes in securities markets, including those related to the financial condition of significant issuers in SHUSA’s investment portfolio;

•the ability to manage risks inherent in our businesses, including through effective use of systems and controls, insurance, derivatives and capital management;

•SHUSA’s ability to timely develop competitive new products and services in a changing environment that are responsive to the needs of SHUSA's customers and are profitable to SHUSA, the success of our marketing efforts to customers, and the potential for new products and services to impose additional unexpected costs, losses, or other liabilities not anticipated at their initiation, and expose SHUSA to increased operational risk;

•competitors of SHUSA who may have greater financial resources or lower costs, or be subject to different regulatory requirements than SHUSA, may innovate more effectively, or may develop products and technology that enable those competitors to compete more successfully than SHUSA and cause SHUSA to lose business or market share and impact our net income adversely;

•SC's agreement with Stellantis not resulting in currently anticipated levels of growth;

•changes in customer spending, investment or savings behavior;

•the ability of SHUSA and its third-party vendors to convert, maintain and upgrade, as necessary, SHUSA’s data processing and other IT infrastructure on a timely and acceptable basis, within projected cost estimates and without significant disruption to our business;

•SHUSA's ability to control operational risks, data security breach risks and outsourcing risks, and the possibility of errors in quantitative models and software SHUSA uses in its business, including as a result of cyberattacks, technological failure, human error, fraud or malice by internal or external parties, and the possibility that SHUSA's controls will prove insufficient, fail or be circumvented;

•changing federal, state, and local tax laws and regulations, which may include tax rates changes, that could materially adversely affect our business, including changes to tax laws and regulations and the outcome of ongoing tax audits by federal, state and local income tax authorities that may require SHUSA to pay additional taxes or recover fewer overpayments compared to what has been accrued or paid as of period-end;

•the costs and effects of regulatory or judicial actions or proceedings, including possible business restrictions resulting from such actions or proceedings;

•the pursuit of protectionist trade or other related policies, including tariffs and sanctions by the U.S., its global trading partners and/or other countries, and/or trade disputes generally;

•adverse publicity or negative public opinion, whether specific to SHUSA or regarding other industry participants or industry-wide factors, or other reputational harm;

•SHUSA’s ability to implement its ESG strategy and appropriately address social, environmental and sustainability matters that may arise from its activities;

•natural or man-made disasters including pandemics and other significant public health emergencies, effects of climate change, and SHUSA's ability to deal with disruptions caused by such disasters and emergencies;

•local, regional or global geopolitical tensions and hostilities, including acts of terrorism or domestic or foreign military conflicts and escalations of hostilities; and

•the other factors that are described in Part I, Item IA - Risk Factors of the Company's Annual Report on Form 10-K for 2023.

If one or more of the factors affecting the Company’s forward-looking information and statements renders forward-looking information or statements incorrect, the Company’s actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking information and statements. Therefore, the Company cautions the reader not to place undue reliance on any forward-looking information or statements herein. The effect of these factors is difficult to predict. Factors other than these also could adversely affect the Company’s results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties as new factors emerge from time to time. Management cannot assess the impact of any such factor on the Company’s business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements reflect the current beliefs and expectations of the Company's management and only speak as of the date of this document, and the Company undertakes no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law. All forward-looking statements attributable to the Company are expressly qualified by these cautionary statements.

1

SHUSA provides the following list of abbreviations and acronyms as a tool for the readers that are used in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Condensed Consolidated Financial Statements and the Notes to Condensed Consolidated Financial Statements.

ABS: Asset-backed securities	Early stage delinquency: loans that are greater than 30 DPD, but less than 90 DPD
ACL: Allowance for credit losses	EFG: Enterprise Financial Group
AFS: Available-for-sale	EIR: Effective interest rate
ALLL: Allowance for loan and lease losses	ERISA: Employee Retirement Security Act of 1974, as amended
AOCI: Accumulated other comprehensive income	ESG: Environmental, Social, and Governance
ASC: Accounting Standards Codification	ETR: Effective tax rate
ASU: Accounting Standards Update	Evaluation Date: September 30, 2024
ATM: Automated teller machine	Exchange Act: Securities Exchange Act of 1934, as amended
BHC: Bank holding company	Expanded Risk-Based Approach: New approach for calculating risk-weighted assets proposed by the federal banking agencies
BHCA: Bank Holding Company Act of 1956, as amended	FASB: Financial Accounting Standards Board
BOLI: Bank-owned life insurance	FBO: Foreign banking organization
Broker-Dealers: SanCap and SSLLC	FDIA: Federal Deposit Insurance Corporation Improvement Act
BSI: Banco Santander International	FDIC: Federal Deposit Insurance Corporation
C&I: Commercial and Industrial Banking	Federal Reserve: Board of Governors of the Federal Reserve System
Capital Proposal: Proposed revisions to capital rules issued by federal banking agencies on July 27, 2023	FHLB: Federal Home Loan Bank
CBB: Consumer and Business Banking	FHLMC: Federal Home Loan Mortgage Corporation
CCAP: Chrysler Capital; trade name used in providing services under the MPLFA	FICO®: Fair Isaac Corporation credit scoring model
CD: Certificate of deposit	FNMA: Federal National Mortgage Association
CECL: Current expected credit losses as defined by FASB ASC Topic 326	FOMC: Federal Open Market Committee
CEO: Chief Executive Officer	FRB: Federal Reserve Bank
CET1: Common equity Tier 1	FTP: Funds transfer pricing
CEVF: Commercial equipment vehicle financing	FVO: Fair value option
CFPB: Consumer Financial Protection Bureau	GAAP: Accounting principles generally accepted in the United States of America
CFO: Chief Financial Officer	GDP: Gross domestic product
CFTC: Commodity Futures Trading Commission	GNMA: Government National Mortgage Association
CIB: Corporate and Investment Banking	GSIB: Globally systemically important bank
CID: Civil investigative demand	HFI: Held-for-investment
CLTV: Combined loan-to-value	HFS: Held-for-sale
CME: Chicago Mercantile Exchange	HPI: Housing Price Index
Company: Santander Holdings USA, Inc.	HTM: Held-to-maturity
Covered Fund: a hedge fund or a private equity fund	IBOR: Inter-bank offered rate
COVID-19: a novel strain of coronavirus declared a pandemic by the World Health Organization in March 2020	IDI: Insured depository institution
CPR: Constant prepayment rate	IHC: U.S. intermediate holding company
CRA: Community Reinvestment Act	IRS: Internal Revenue Service
CRE: Commercial Real Estate	ISDA: International Swaps and Derivatives Association, Inc.
DCF: Discounted cash flow	IT: Information technology
DFA: Dodd-Frank Wall Street Reform and Consumer Protection Act	LBO: Large banking organizations with assets of $100 billion or more
DIF: Deposit Insurance Fund	LCR: Liquidity coverage ratio
DOJ: Department of Justice	LGD: Loss given default
DPD: Days past due	LHFI: Loans held for investment
DRIVE: Drive Auto Receivables Trust, a securitization platform	LHFS: Loans held for sale
DTI: Debt-to-income	LIBOR: London Interbank Offered Rate
EAD: Exposure at default	LIHTC: Low income housing tax credit
MBS: Mortgage-backed securities	LTD: Long-term debt
MD&A: Management's Discussion and Analysis of Financial Condition and Results of Operations	LTV: Loan-to-value
Moody’s: Moody's Investors Service, Inc.	SBALT: SBNA Auto Lease Trust

2

MPLFA: Master private-label financing agreement with Stellantis	SBAT: SBNA Auto Receivable Trust
MSR: Mortgage servicing right	SBNA or the Bank: Santander Bank, National Association
MVE: Market value of equity	SC: Santander Consumer USA Holdings Inc. and its subsidiaries
NCI: Non-controlling interest	SCARF: Santander Consumer Auto Receivables Funding
NCO: Net charge-off	SCART: Santander Consumer Auto Receivables Trust
NFA: National Futures Association	SCB: Stress capital buffer
NMDs: Non-maturity deposits	SCF: Statement of cash flows
NMTC: New market tax credits	SDART: Santander Drive Auto Receivables Trust
NOI: Net operating income	SDGT: Specially Designated Global Terrorist
NPL: Non-performing loan	SEC: Securities and Exchange Commission
NPR: Notice of proposed rule-making	Securities Act: Securities Act of 1933, as amended
OCC: Office of the Comptroller of the Currency	Securities Financing Activities: Resale, repurchase securities borrowed and securities lending agreements
OCI: Other comprehensive income	SHUSA: Santander Holdings USA, Inc.
OECD: Organization for Economic Cooperation and Development	SOFR: Secured overnight financing rate
OEM: Original equipment manufacturer	SPAIN: Santander Private Auto Issuing Note
OIS: Overnight indexed swap	SPE: Special purpose entity
OREO: Other real estate owned	SSLLC: Santander Securities LLC
Parent Company: The parent holding company of SBNA and other consolidated subsidiaries	Stellantis: Fiat Chrysler Automobiles U.S. LLC parent Stellantis N.V. and/or any affiliates
PCH: Pierpont Capital Holdings LLC, now known as Santander Capital Holdings LLC	Subvention: Reimbursement of the finance provider by a manufacturer for the difference between a market loan or lease rate and the below-market rate given to a customer.
PD: Probability of default	TDR: Troubled debt restructuring
Related Party Acquirer: Santander subsidiary that acquired Services and Promotions Delaware Corp.	TLAC: Total loss-absorbing capacity
RIC: Retail installment contract	TLAC Rule: The Federal Reserve's TLAC rule
ROU: Right-of-use	Trusts: Securitization trusts
RV: Recreational vehicle	UPB: Unpaid principal balance
RWA: Risk-weighted asset	VIE: Variable interest entity
S&P: Standard & Poor's	VOE: Voting interest entity
SanCap: Santander US Capital Markets LLC	YTD: Year-to-date
Santander: Banco Santander, S.A.
Santander UK: Santander UK plc

3

PART I. FINANCIAL INFORMATION

ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited (In thousands)

	September 30, 2024		December 31, 2023
ASSETS
Cash and cash equivalents	$	16,704,983	$	13,118,428
Federal funds sold and securities purchased under resale agreements or similar arrangements (1)	8,637,874		10,238,714
Investment securities:
AFS at fair value (amortized cost of $7,606,923 and $7,925,890 as of September 30, 2024 and December 31, 2023, respectively)	6,962,520		7,039,537
Trading securities	11,302,684		7,967,875
HTM (fair value of $8,201,764 and $7,562,523 as of September 30, 2024 and December 31, 2023, respectively)	9,554,585		9,039,704
Other investments	1,344,079		1,353,278
LHFI (2) (6)	89,686,478		93,047,209
ALLL (6)	(6,561,430)		(6,932,053)
Net LHFI	83,125,048		86,115,156
LHFS (3)	1,385,800		160,118
Premises and equipment, net (4)	982,580		987,088
Operating lease assets, net (6)(7)	12,516,535		13,782,840
Goodwill	2,766,665		2,766,665
Intangible assets, net	258,451		287,159
BOLI	2,004,484		1,982,428
Restricted cash (6)	5,104,259		5,549,701
Other assets (5) (6)	5,368,802		4,583,884
TOTAL ASSETS	$	168,019,349	$	164,972,575
LIABILITIES
Accounts payables and accrued expenses	$	5,541,622	$	5,165,566
Deposits and other customer accounts	77,544,467		77,073,176
Federal funds purchased and securities loaned or sold under repurchase agreements (8)	18,103,213		16,290,786
Trading liabilities	2,465,461		2,699,500
Borrowings and other debt obligations (6)	44,433,441		44,144,051
Advance payments by borrowers for taxes and insurance	192,172		165,843
Deferred tax liabilities, net	—		84,187
Other liabilities (6)	1,244,476		1,848,557
TOTAL LIABILITIES	149,524,852		147,471,666
Commitments and contingencies (Note 16)
MEZZANINE EQUITY
Preferred stock (no par value; 7,500,000 shares authorized; 2,000,000 shares outstanding at September 30, 2024 and December 31, 2023, respectively)	2,000,000		2,000,000
STOCKHOLDER'S EQUITY
Common stock and paid-in capital (no par value; 800,000,000 shares authorized; 530,391,043 shares outstanding at both September 30, 2024 and December 31, 2023, respectively)	17,335,889		17,284,611
Accumulated other comprehensive loss, net of taxes	(691,606)		(1,065,568)
Retained earnings / (accumulated deficit)	(149,786)		(718,134)
TOTAL STOCKHOLDER'S EQUITY	16,494,497		15,500,909
TOTAL LIABILITIES, MEZZANINE AND STOCKHOLDER'S EQUITY	$	168,019,349	$	164,972,575

(1) Includes $0.4 billion and $2.1 billion of contracts held at the FVO, at September 30, 2024 and December 31, 2023, respectively,

(2) Includes $10.1 million and $13.9 million of loans recorded at fair value at September 30, 2024 and December 31, 2023, respectively.

(3) Includes $1.0 billion and $19.5 million of loans recorded at the FVO at September 30, 2024 and December 31, 2023, respectively.

(4) Net of accumulated depreciation of $2.4 billion and $2.3 billion at September 30, 2024 and December 31, 2023, respectively.

(5) Includes MSRs of $87.2 million and $94.3 million at September 30, 2024 and December 31, 2023, respectively, for which the Company has elected the FVO.

(6) The Company has interests in certain Trusts that are considered VIEs for accounting purposes. At September 30, 2024 and December 31, 2023, LHFI included $24.9 billion and $25.1 billion, LHFS included $0.3 billion and zero, Operating leases assets, net included $12.5 billion and $13.8 billion, restricted cash included $880.3 million and $864.5 million, Other assets included $667.2 million and $638.0 million, Borrowings and other debt obligations included $27.8 billion and $25.1 billion, and Other liabilities included $131.3 million and $119.3 million of assets or liabilities, respectively, that were included within VIEs. See Note 7 to these Condensed Consolidated Financial Statements for additional information.

(7) Net of accumulated depreciation of $3.0 billion and $3.5 billion at September 30, 2024 and December 31, 2023, respectively.

(8) Includes $100.0 million and $595.4 million of contracts recorded at the FVO at September 30, 2024 and December 31, 2023, respectively.

See accompanying notes to Unaudited Condensed Consolidated Financial Statements

4

SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited (In thousands)

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
INTEREST INCOME:
Loans	$	2,166,424	$	2,115,442	$	6,443,691	$	6,149,657
Interest-earning deposits	222,492		218,925		648,631		572,074
Interest and fees on federal funds sold and securities purchased under resale agreements or similar arrangements	728,670		580,720		2,210,518		1,797,354
Investment securities:
AFS	93,057		66,773		287,729		199,769
HTM	54,371		46,173		145,165		139,719
Trading securities	150,944		106,921		414,215		282,479
Other investments	10,372		12,172		35,304		30,144
TOTAL INTEREST INCOME	3,426,330		3,147,126		10,185,253		9,171,196
INTEREST EXPENSE:
Deposits and other customer accounts	527,556		440,239		1,545,493		1,086,496
Interest expense on federal funds purchased and securities loaned or sold under repurchase agreements	860,769		675,050		2,589,950		2,012,023
Interest expense on trading liabilities	45,507		33,273		129,342		102,964
Borrowings and other debt obligations	609,471		527,883		1,756,708		1,497,366
TOTAL INTEREST EXPENSE	2,043,303		1,676,445		6,021,493		4,698,849
NET INTEREST INCOME	1,383,027		1,470,681		4,163,760		4,472,347
Credit loss expense	431,339		856,292		1,317,569		1,607,543
NET INTEREST INCOME AFTER CREDIT LOSS EXPENSE	951,688		614,389		2,846,191		2,864,804
NON-INTEREST INCOME:
Consumer and commercial fees	104,948		79,440		285,027		258,271
Capital markets and foreign exchange income	102,075		103,675		316,349		217,561
Lease income	535,872		617,962		1,688,602		1,866,968
Miscellaneous income, net (1)	7,099		83,316		264,388		283,705
TOTAL FEES AND OTHER INCOME	749,994		884,393		2,554,366		2,626,505
Net gain on sale of investment securities	55,117		37,048		184,304		108,556
TOTAL NON-INTEREST INCOME	805,111		921,441		2,738,670		2,735,061
GENERAL, ADMINISTRATIVE AND OTHER EXPENSES:
Compensation and benefits	532,890		528,465		1,600,393		1,519,614
Occupancy and equipment expenses	157,017		160,608		473,847		505,226
Technology, outside service, and marketing expense	196,345		184,168		575,244		523,190
Loan expense	87,287		86,729		254,822		276,420
Lease expense	442,947		479,991		1,334,384		1,455,820
Other expenses	179,221		123,883		469,325		383,861
TOTAL GENERAL, ADMINISTRATIVE AND OTHER EXPENSES	1,595,707		1,563,844		4,708,015		4,664,131
INCOME / (LOSS) BEFORE INCOME TAX	161,092		(28,014)		876,846		935,734
Income tax (benefit)	(32,187)		(147,767)		(74,254)		(54,937)
NET INCOME	$	193,279	$	119,753	$	951,100	$	990,671

(1) Includes equity investment income/(expense), net.

See accompanying notes to Unaudited Condensed Consolidated Financial Statements

5

SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited (In thousands)

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
NET INCOME	$	193,279	$	119,753	$	951,100	$	990,671
Net unrealized changes in cash flow hedge derivative financial instruments, net of tax	71,122		52,935		174,194		175,104
Net unrealized gains / (losses) on investment in debt securities, net of tax	147,796		(39,640)		198,663		(49,472)
Pension and post-retirement actuarial gains, net of tax	449		506		1,105		1,497
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX	219,367		13,801		373,962		127,129
COMPREHENSIVE INCOME	$	412,646	$	133,554	$	1,325,062	$	1,117,800

See accompanying notes to Unaudited Condensed Consolidated Financial Statements

6

SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

Unaudited (In thousands)

	Common Shares Outstanding	Common Stock and Paid-in Capital		Accumulated other comprehensive loss, net of taxes		Retained Earnings / (Accumulated Deficit)		Total Stockholder's Equity		Preferred Stock Mezzanine
Balance, July 1, 2024	530,391	$	17,335,889	$	(910,973)	$	(298,890)	$	16,126,026	$	2,000,000
Comprehensive income	—	—		219,367		193,279		412,646		—
Dividends paid on preferred stock	—	—		—		(44,175)		(44,175)		—
Balance, September 30, 2024	530,391	$	17,335,889	$	(691,606)	$	(149,786)	$	16,494,497	$	2,000,000
	Common Shares Outstanding	Common Stock and Paid-in Capital		Accumulated other comprehensive loss, net of taxes		Retained Earnings		Total Stockholder's Equity		Preferred Stock Mezzanine
Balance, July 1, 2023	530,391	$	17,284,611	$	(1,222,695)	$	1,039,631	$	17,101,547	$	1,500,000
Comprehensive (loss) / income	—	—		13,801		119,753		133,554		—
Dividends paid on common stock	—	—		—		(250,000)		(250,000)		—
Dividends paid on preferred stock	—	—		—		(35,786)		(35,786)		—
Balance, September 30, 2023	530,391	$	17,284,611	$	(1,208,894)	$	873,598	$	16,949,315	$	1,500,000

	Common Shares Outstanding	Common Stock and Paid-in Capital		Accumulated Other Comprehensive Income / (Loss), Net of Tax		Retained Earnings / (Accumulated Deficit)		Total Stockholder's Equity		Preferred Stock Mezzanine
Balance, January 1, 2024	530,391	$	17,284,611	$	(1,065,568)	$	(718,134)	$	15,500,909	$	2,000,000
Comprehensive income	—	—		373,962		951,100		1,325,062		—
Dividends paid on common stock	—	—		—		(250,000)		(250,000)		—
Dividends paid on preferred stock	—	—		—		(132,752)		(132,752)		—
Sale of subsidiary (Note 1)	—	51,278		—		—		51,278		—
Balance, September 30, 2024	530,391	$	17,335,889	$	(691,606)	$	(149,786)	$	16,494,497	$	2,000,000
	Common Shares Outstanding	Common Stock and Paid-in Capital		Accumulated Other Comprehensive Loss, Net of Tax		Retained Earnings		Total Stockholder's Equity		Preferred Stock Mezzanine
Balance, January 1, 2023	530,391	$	17,284,611	$	(1,336,023)	$	1,481,134	$	17,429,722	$	500,000
Cumulative-effect adjustment upon adoption of new accounting standards (Note 1)	—	—		—		(41,396)		(41,396)		—
Comprehensive income	—	—		127,129		990,671		1,117,800		—
Dividends paid on common stock	—	—		—		(1,500,000)		(1,500,000)		—
Dividends paid on preferred stock	—	—		—		(56,811)		(56,811)		—
Preferred stock offering	—	—		—		—		—		1,000,000
Balance, September 30, 2023	530,391	$	17,284,611	$	(1,208,894)	$	873,598	$	16,949,315	$	1,500,000

See accompanying notes to Unaudited Condensed Consolidated Financial Statements

7

SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited (in thousands)

	Nine months ended September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	951,100	$	990,671
Adjustments to reconcile net income to net cash provided by operating activities:
Credit loss expense/(benefit)	1,317,569		1,607,543
Deferred tax (benefit) / expense	(317,232)		(221,033)
Depreciation, amortization and accretion	1,968,333		1,952,133
Net (gain)/loss on sale or disposal of loans, investment securities, and other assets	(36,956)		(96,138)
Originations and purchases of LHFS	(2,310,819)		—
Proceeds from sales of and collections on LHFS	1,319,940		2,083
Net change in:
Trading securities and trading liabilities, net	(3,383,714)		(2,299,994)
Other assets and BOLI	(917,270)		(1,265,613)
Other liabilities	145,986		(240,852)
Other operating activities, net	(10,339)		(19,236)
NET CASH (USED IN) / PROVIDED BY OPERATING ACTIVITIES	(1,273,402)		409,564
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of AFS investment securities	200,344		211,171
Proceeds from prepayments and maturities of AFS investment securities	587,985		1,215,255
Purchases of AFS investment securities	(465,391)		(693,525)
Proceeds from prepayments and maturities of HTM investment securities	424,578		403,973
Purchases of HTM investment securities	(876,711)		—
Proceeds from sales of equity method and other investments	286,611		342,627
Proceeds from maturities of other investments	—		100,000
Purchases of and contributions to equity method and other investments	(417,716)		(940,762)
Distributions from equity method investments	2,952		3,290
Net change in federal funds sold and securities purchased under resale agreements	1,600,840		2,955,461
Proceeds from sales of LHFI	2,201,432		352,735
Purchases of LHFI	(112,334)		(117,192)
Proceeds from settlements of BOLI policies	27,047		40,961
Net change in loans other than purchases and sales	(1,477,475)		(850,140)
Purchases and originations of operating leases	(3,941,865)		(4,380,980)
Proceeds from the sale and termination of operating leases	3,744,908		3,465,350
Purchases and sales of premises and equipment, net	(186,596)		(132,768)
Proceeds from sale of residual interest in VIE	71,468		—
Proceeds from the sale of subsidiary	71,018		—
NET CASH (USED IN) / PROVIDED BY INVESTING ACTIVITIES	1,741,095		1,975,456
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits and other customer accounts	471,291		(1,657,908)
Net change in short-term borrowings	(564,642)		42,645
Net proceeds from long-term borrowings	26,491,938		22,325,825
Repayments of long-term borrowings	(25,232,449)		(22,977,140)
Net change in federal funds purchased and securities loaned or sold under repurchase agreements	1,812,427		(53,059)
Dividends paid on common stock	(250,000)		(1,500,000)
Dividends paid on preferred stock	(132,752)		(56,811)
Preferred stock offering	—		1,000,000
Proceeds from the sale of subsidiary, net of tax	51,278		—
Other financing activities, net	26,329		39,069
NET CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES	2,673,420		(2,837,379)
NET (DECREASE) / INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	3,141,113		(452,359)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	18,668,129		16,564,314
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (1)	$	21,809,242	$	16,111,955
NON-CASH TRANSACTIONS
Loans transferred to/(from) OREO and other repossessed assets	34,360		59,192
Loans transferred from/(to) LHFI (from)/to LHFS, net	346,887		713,344
Transfer of financial interest in a VIE - Loans	507,744		—
Transfer of financial interest in a VIE - Borrowings	451,356		—
Non-cash transfer of financial assets in an off-balance sheet securitization transaction	53,050		—

(1) The nine months ended September 30, 2024 and 2023 include cash and cash equivalents balances of $16.7 billion and $10.7 billion, respectively, and restricted cash balances of $5.1 billion and $5.4 billion, respectively.

See accompanying notes to Unaudited Condensed Consolidated Financial Statements

8

NOTE 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND ACCOUNTING POLICIES

SHUSA is the parent holding company of SBNA, a national banking association; SC, a consumer finance company headquartered in Dallas, Texas; BSI, a financial services company headquartered in Miami, Florida that offers a full range of banking services to foreign individuals and corporations based primarily in Latin America; SanCap, an institutional broker-dealer headquartered in New York, which has significant capabilities in market-making via an experienced fixed-income sales and trading team and a focus on structuring and advisory services for asset originators in the real estate and specialty finance markets; SSLLC, a broker-dealer headquartered in Boston, Massachusetts; and several other subsidiaries. SHUSA is headquartered in Boston and SBNA's home office is in Wilmington, Delaware. SSLLC is a registered investment adviser with the SEC. SHUSA's two largest subsidiaries by asset size and revenue are SBNA and SC. SHUSA is a wholly-owned subsidiary of Santander.

The Company specializes in consumer financing focused on vehicle finance, servicing of third-party vehicle financing, and delivering service to dealers and customers across the full credit spectrum. This includes indirect origination and servicing of vehicle loans and leases, principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers, origination of vehicle loans through a web-based direct lending program, purchases of vehicle loans from other lenders, and servicing of automobile and recreational and marine vehicle portfolios for other lenders. The Company sells consumer vehicle loans and leases through flow agreements and, when market conditions are favorable, it accesses the ABS market through securitizations of consumer vehicle loans and leases.

In addition to specialized consumer finance, the Company also attracts deposits and provides other retail banking services through its network of retail branches with locations in Connecticut, Delaware, Florida, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island and originates small business, middle market, large and global commercial loans, multifamily loans, and other consumer loans and leases throughout the Mid-Atlantic and Northeastern areas of the United States. For large institutional investors, the Company provides structured products, emerging markets credit and U.S. investment grade credit, U.S. rates, short-term fixed-income, debt and equity capital markets, investment banking, exchange-traded derivatives, and cash equities, benefiting from a combination of Santander’s global reach and access to financial hubs together with extensive local market knowledge and regional expertise.

Sale of Subsidiary

In May 2024, the Company sold its wholly owned subsidiary Services and Promotions Delaware Corp. to the Related Party Acquirer. Services and Promotions Delaware Corp. (through a wholly-owned subsidiary) owned and managed the corporate office building located at 1401 Brickell Avenue, Miami, Florida, which leased space to BSI and other tenants until the sale. The Related Party Acquirer paid fair value of approximately $134.0 million. The Company recorded proceeds in excess of its carrying value (approximately $51.6 million, net of a tax effect of $7.9 million) to additional paid-in capital as a result of the transaction between entities under common control.

Joint Venture with FDIC

In December 2023, SBNA acquired a 20 percent interest in the Structured LLC for approximately $1.1 billion. The Structured LLC was established by the FDIC to hold and service a $9 billion portfolio primarily consisting of New York-based rent-controlled and rent-stabilized multifamily loans retained by the FDIC following a recent bank failure. SBNA classifies its 20 percent interest in the Structured LLC as an AFS debt security. Under the terms of the arrangement, SBNA will receive payments from the Structured LLC generated from net cash flows of the underlying loans based on its proportionate interest in the Structured LLC. SBNA is manager and servicer of the loan portfolio and is paid a market rate fees by the Structured LLC.

Basis of Presentation

These Condensed Consolidated Financial Statements include the accounts of the Company and its consolidated subsidiaries, including certain Trusts that are considered VIEs. The Company generally consolidates VIEs for which it is deemed to be the primary beneficiary and VOEs in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation.

These Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and pursuant to SEC regulations. In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all adjustments of a normal and recurring nature necessary for a fair statement of the Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Stockholder's Equity and Statement of Cash Flows for the periods indicated, and contain adequate disclosure to make the information presented not misleading.

9

NOTE 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND ACCOUNTING POLICIES (continued)

Certain prior-year amounts have been reclassified to conform to the current year presentation. These reclassifications did not have a material impact on the Company's consolidated financial condition or results of operations.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates, and those differences may be material. The most significant estimates include the ACL, expected end-of-term lease residual values, and goodwill. These estimates, although based on actual historical trends and modeling, may potentially show significant variances over time.

Recently Adopted Accounting Standards

On January 1, 2024, the Company adopted ASU 2023-02 Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, which permits the use of an accounting policy election to apply the proportional amortization method to all tax equity investments that meet specific criteria. The adoption of this standard did not impact the Company's financial position or results of operations.

On January 1, 2023, the Company adopted ASU 2022-02 Financial Instruments – Credit Losses (Topic 326) Troubled Debt Restructuring and Vintage Disclosures. Upon adoption of this standard, the Company recorded an increase in the ACL of approximately $55.2 million, a decrease in retained earnings of approximately $41.4 million and a decrease in deferred tax liabilities of approximately $13.8 million. Refer to Note 3 for additional information on modified loans.

Recently Issued Accounting Standards Not Yet Adopted

On August 23, 2023, the FASB issued ASU 2023-05 Business Combinations - Joint Venture Formations, Recognition and Initial Measurement, requiring most assets and liabilities contributed to a joint venture upon formation to be measured at fair market value. The new guidance is effective prospectively for all joint ventures with a formation date on or after January 1, 2025, and early adoption is permitted. The Company does not expect a material impact on the Company’s financial position or results of operations as a result of this accounting standard.

On November 27, 2023, the FASB issued ASU 2023-07 Segment Reporting – Improvements to Reportable Segment Disclosures, which enhances segment disclosure requirements primarily in the area of significant segment expenses. The new disclosure requirements are effective retrospectively for all periods presented beginning with the 2024 annual financial statements and interim periods thereafter, with early adoption permitted.

On December 14, 2023, the FASB issued ASU 2023-09 Income Taxes – Improvements to Income Tax Disclosures, requiring consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. The new disclosure requirements are effective for annual periods beginning in 2025, with early adoption permitted.

Subsequent Events

The Company evaluated events from the date of these Condensed Consolidated Financial Statements on September 30, 2024 through the issuance of these Condensed Consolidated Financial Statements. Except as noted in Note 3, Note 7, and Note 9 to these Condensed Consolidated Financial Statements, there were no material events in that period that would require recognition or disclosure in its Condensed Consolidated Financial Statements as of September 30, 2024.

10

NOTE 2. INVESTMENT SECURITIES

Summary of Investments in Debt Securities - AFS and HTM

The following table presents the amortized cost, gross unrealized gains and losses and approximate fair values of investments in debt securities AFS at the dates indicated:

	September 30, 2024								December 31, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss		Fair Value
U.S. Treasury securities	$	14,640	$	13	$	—	$	14,653	$	25,391	$	18	$	—	$	25,409
Corporate debt securities	1,202		1		—		1,203		31,584		7		(1)		31,590
ABS	633,412		258		(920)		632,750		512,553		29		(1,919)		510,663
Beneficial Interest in Structured LLC (1)	1,098,844		106,931		—		1,205,775		1,122,510		—		—		1,122,510
MBS:
GNMA - Residential	2,972,232		—		(300,925)		2,671,307		3,187,600		—		(394,756)		2,792,844
GNMA - Commercial	647,268		3		(139,670)		507,601		659,882		4		(141,672)		518,214
FHLMC and FNMA - Residential	2,173,509		154		(332,641)		1,841,022		2,330,558		3		(381,142)		1,949,419
FHLMC and FNMA - Commercial	90,094		—		(1,885)		88,209		91,821		—		(2,933)		88,888
Unallocated fair value hedge basis adjustment (2)	(24,278)		—		24,278		—		(36,009)		—		36,009		—
Total investments in debt securities AFS	$	7,606,923	$	107,360	$	(751,763)	$	6,962,520	$	7,925,890	$	61	$	(886,414)	$	7,039,537

(1) Represents a 20 percent interest in the Structured LLC to hold and service a pool of multi-family loans.

(2) The Company has entered into fair value hedges of portions of a closed portfolio of AFS debt securities, using the portfolio layer method. Refer to Note 12 for additional information.

The following table presents the amortized cost, gross unrealized gains and losses and approximate fair values of investments in debt securities HTM at the dates indicated:

	September 30, 2024								December 31, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss		Fair Value
Investment securities:
ABS and other interests in structured securities	$	68,109	$	512	$	(71)	$	68,550	$	29,701	$	—	$	(363)	$	29,338
MBS:
GNMA - Residential	3,126,662		8,494		(424,651)		2,710,505		2,752,158		724		(469,929)		2,282,953
GNMA - Commercial	4,735,863		915		(854,263)		3,882,515		4,843,478		492		(894,635)		3,949,335
FHLMC and FNMA - Residential	1,623,951		4,799		(88,556)		1,540,194		1,414,367		—		(113,470)		1,300,897
Total investments in debt securities HTM	$	9,554,585	$	14,720	$	(1,367,541)	$	8,201,764	$	9,039,704	$	1,216	$	(1,478,397)	$	7,562,523

As of September 30, 2024 and December 31, 2023, the Company had investment securities with an estimated carrying value of $12.1 billion and $11.2 billion, respectively, pledged as collateral. The Company's investment securities pledged as collateral were comprised of the following: $4.2 billion and $7.5 billion, respectively, were pledged as collateral for the Company's borrowing capacity with the FRB; $2.8 billion and $3.2 billion, respectively, were pledged to secure public fund deposits; $25.5 million and $95.6 million, respectively, were pledged to various independent parties to secure repurchase agreements, support hedging relationships, and for recourse on loan sales; $281.5 million and $349.9 million, respectively, were pledged to secure the Company's customer overnight sweep product; and $4.8 billion and $0 million, respectively, were pledged as collateral for the Company's borrowing capacity with the FHLB as of September 30, 2024 and December 31, 2023. There were no amounts pledged to secure repurchase agreements in which the secured party has the right to sell or repledge the collateral as of September 30, 2024 or December 31, 2023. The Company also participates in Securities Financing Activities discussed further in Note 11 to these Condensed Consolidated Financial Statements.

At September 30, 2024 and December 31, 2023, the Company had $126.5 million and $79.6 million, respectively, of accrued interest related to investment securities which is included in the Other assets line of the Company's Condensed Consolidated Balance Sheets. No accrued interest related to investment securities was written off during the periods ended September 30, 2024 or December 31, 2023.

11

NOTE 2. INVESTMENT SECURITIES (continued)

Contractual Maturity of Investments in Debt Securities

Contractual maturities of the Company’s investments in debt securities AFS at September 30, 2024 were as follows:

(in thousands)	Amortized Cost(1)		Fair Value
Due within one year	$	21,406	$	21,375
Due after 1 year but within 5 years	131,645		128,656
Due after 5 years but within 10 years	631,230		626,070
Due after 10 years	6,846,920		6,186,419
Total	$	7,631,201	$	6,962,520
(1) Does not include unallocated fair value hedge basis adjustment.

Contractual maturities of the Company’s investments in debt securities HTM at September 30, 2024 were as follows:

(in thousands)	Amortized Cost		Fair Value
Due after 1 year but within 5 years	$	25,069	$	24,998
Due after 5 years but within 10 years	47,141		47,550
Due after 10 years	9,482,375		8,129,216
Total	$	9,554,585	$	8,201,764

Actual maturities may differ from contractual maturities when there is a right to call or prepay obligations with or without call or prepayment penalties.

12

NOTE 2. INVESTMENT SECURITIES (continued)

Gross Unrealized Loss and Fair Value of Investments in Debt Securities AFS and HTM

The following table presents the aggregate amount of unrealized losses on debt securities in the Company’s AFS investment portfolios classified according to the amount of time those securities have been in a continuous loss position as of the dates indicated:

	September 30, 2024								December 31, 2023
	Less than 12 months				12 months or longer				Less than 12 months				12 months or longer
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities	$	—	$	—	$	—	$	—	$	6,992	$	—	$	—	$	—
Corporate debt securities	83		—		13		—		7,325		(1)		13		—
ABS	324,031		(607)		11,609		(313)		6,749		(168)		402,325		(1,751)
MBS:
GNMA - Residential	—		—		2,670,797		(300,925)		—		—		2,792,843		(394,756)
GNMA - Commercial	—		—		507,598		(139,670)		—		—		518,210		(141,672)
FHLMC and FNMA - Residential	—		—		1,823,665		(332,641)		—		—		1,949,320		(381,142)
FHLMC and FNMA - Commercial	—		—		88,208		(1,885)		—		—		88,888		(2,933)
Total investments in debt securities AFS (1)	$	324,114	$	(607)	$	5,101,890	$	(775,434)	$	21,066	$	(169)	$	5,751,599	$	(922,254)

(1) Does not include unallocated fair value hedge basis adjustment.

The following table presents the aggregate amount of unrealized losses on debt securities in the Company’s HTM investment portfolios classified according to the amount of time those securities have been in a continuous loss position as of the dates indicated:

	September 30, 2024								December 31, 2023
	Less than 12 months				12 months or longer				Less than 12 months				12 months or longer
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
ABS and other interests in structured securities	$	—	$	—	$	17,440	$	(71)	$	22,461	$	(313)	$	6,878	$	(50)
MBS:
GNMA - Residential	—		—		2,069,952		(424,651)		—		—		2,166,032		(469,929)
GNMA - Commercial	—		—		3,835,627		(854,263)		45,983		(1,610)		3,856,536		(893,025)
FHLMC and FNMA - Residential	—		—		1,233,042		(88,556)		57,955		(528)		1,242,941		(112,942)
Total investments in debt securities HTM	$	—	$	—	$	7,156,061	$	(1,367,541)	$	126,399	$	(2,451)	$	7,272,387	$	(1,475,946)

Allowance for credit-related losses on AFS and HTM securities

The Company did not record an allowance for credit-related losses on AFS or HTM securities at September 30, 2024 or December 31, 2023. As discussed in Note 1 to the Company's Annual Report on Form 10-K for 2023, securities for which management expects risk of nonpayment of the amortized cost basis is zero do not have a reserve.

For securities that do not qualify for the zero credit loss expectation exception, management has concluded that the unrealized losses are not credit-related since (1) they are not related to the underlying credit quality of the issuers, (2) the entire contractual principal and interest due on these securities is currently expected to be recoverable, (3) the Company does not intend to sell these investments at a loss and (4) it is more likely than not that the Company will not be required to sell the investments before recovery of the amortized cost basis, which for the Company's debt securities may be at maturity.

13

NOTE 2. INVESTMENT SECURITIES (continued)

Gains (Losses) on Sales of Investment Securities

The realized gross gains and losses from sales of investment securities were as follows for the periods indicated:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
AFS debt and other securities:
Gross realized gains	$	444	$	—	$	444	$	192
Gross realized losses	—		—		—		(4,809)
Net realized gains/(losses) on AFS and other securities	$	444	$	—	$	444	$	(4,617)
Total trading securities gains/(losses)	54,673		37,048		183,860		113,173
Total realized gains/(losses) in income from investments	$	55,117	$	37,048	$	184,304	$	108,556

The Company uses the specific identification method to determine the cost of the securities sold and the gain or loss recognized.

Trading Securities

At September 30, 2024 and December 31, 2023, the Company held $11.3 billion and $8.0 billion, respectively, of trading securities. Gains and losses on trading securities are recorded within Net gain on sale of investment securities on the Company's Condensed Consolidated Statements of Operations. At September 30, 2024 and December 31, 2023, the Company had $10.8 billion and $7.4 billion, respectively, of assets classified as trading securities pledged as collateral to counterparties that have the right to repledge these securities.

Other Investments

Other investments consisted of the following as of the dates indicated:

(in thousands)	September 30, 2024		December 31, 2023
FHLB of Pittsburgh and FRB stock	$	486,918	$	631,394
LIHTC investments	795,898		660,694
Equity securities not held for trading (1)	61,263		61,190
Total	$	1,344,079	$	1,353,278

(1)    Includes $12.8 million and $2.8 million of equity certificates related to off-balance sheet securitizations as of September 30, 2024 and December 31, 2023, respectively.

Other investments primarily include the Company's investment in the stock of the FHLB of Pittsburgh and the FRB. These stocks do not have readily determinable fair values because their ownership is restricted and there is no market for their sale. The stocks can be sold back only at their par value of $100 per share, and FHLB stock can be sold back only to the FHLB or to another member institution. Accordingly, these stocks are carried at cost. During the three months and nine months ended September 30, 2024, the Company purchased zero and $120.2 million of FHLB stock at par, and redeemed $13.2 million and $286.6 million of FHLB stock at par. The Company purchased $8.7 million and $21.9 million of FRB stock at par and redeemed no FRB stock at par during the three months and nine months ended September 30, 2024. There was no gain or loss associated with these redemptions.

The Company's LIHTC investments are accounted for using the proportional amortization method. Equity securities are measured at fair value with changes in fair value recognized in net income and consist primarily of CRA mutual fund investments.

Interest-bearing deposits include deposits maturing in more than 90 days with Santander affiliates that are not consolidated.

With the exception of equity and trading securities, which are measured at fair value, the Company evaluates these other investments for impairment based on the ultimate recoverability of the carrying value, rather than by recognizing temporary declines in value.

14

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES

Overall

The Company's LHFI are generally reported at their outstanding principal balances net of any cumulative charge-offs, unamortized deferred fees and costs and unamortized premiums or discounts. Certain LHFI are accounted for at fair value under the FVO. Certain loans are pledged as collateral for borrowings, securitizations, or SPEs. These loans totaled $60.2 billion at September 30, 2024 and $60.3 billion at December 31, 2023.

LHFS includes loans that the Company no longer intends to hold to maturity or for the foreseeable future and loans the Company has the intent to sell or securitize in an off-balance sheet securitization. The LHFS portfolio balance at September 30, 2024 was $1.4 billion, compared to $160.1 million at December 31, 2023. For a discussion on the composition and valuation of LHFS at fair value, see Note 13 to these Condensed Consolidated Financial Statements.

Interest on loans is credited to income as it is earned. Loan origination fees and certain direct loan origination costs are deferred and recognized as adjustments to interest income in the Condensed Consolidated Statements of Operations generally over the contractual life of the loan utilizing the interest method. Loan origination costs and fees and premiums and discounts on RICs are deferred and recognized in interest income over their estimated lives using estimated prepayment speeds, which are updated on a monthly basis. At September 30, 2024 and December 31, 2023, accrued interest receivable on the Company's loans was $630.7 million and $661.0 million, respectively.

During the third quarter of 2024, the Company sold approximately $1.3 billion of personal unsecured loans to a third party. The transaction resulted in a loss on sale of approximately $106.8 million, offset by a release of the ACL in the amount of approximately $101.8 million.

In addition, during the third quarter of 2024, the Company transferred its financial interests of approximately $507.7 million on-balance sheet auto RIC Trust to a third party and to a newly-formed off-balance sheet Trust. Refer to Note 7 to these Condensed Consolidated Financial Statements for additional discussion of this transaction.

During the third quarter of 2024, the Company transferred an additional $307.4 million of auto RICs from LHFI to LHFS in connection with a planned de-consolidation and transfer to an off-balance sheet Trust, resulting in a release of the ACL in the amount of approximately $33.8 million, offset by a mark to fair value loss on securitization of approximately $8.0 million. This transaction was completed in October 2024.

15

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

Loan and Lease Portfolio Composition

The following presents the composition of loans and leases HFI by portfolio and by rate type as of the dates indicated:

	September 30, 2024				December 31, 2023
(dollars in thousands)	Amount		Percent		Amount		Percent
Commercial LHFI:
CRE loans	$	8,826,084	9.8	%	$	8,747,544	9.4	%
C&I loans	9,790,851		10.9	%	11,181,962		12.0	%
Multifamily loans	9,982,721		11.1	%	10,548,905		11.3	%
Other commercial (2)	7,518,806		8.4	%	7,476,113		8.0	%
Total commercial LHFI	$	36,118,462	40.2	%	$	37,954,524	40.7	%
Consumer loans secured by real estate:
Residential mortgages	4,519,334		5.0	%	4,816,218		5.2	%
Home equity loans and lines of credit	2,169,140		2.4	%	2,448,454		2.6	%
Total consumer loans secured by real estate	$	6,688,474	7.4	%	$	7,264,672	7.8	%
Consumer loans not secured by real estate:
RICs and auto loans	44,929,443		50.2	%	43,705,359		47.0	%
Personal unsecured loans	1,909,725		2.1	%	4,062,700		4.4	%
Other consumer (3)	40,374		0.1	%	59,954		0.1	%
Total consumer loans	$	53,568,016	59.8	%	$	55,092,685	59.3	%
Total LHFI (1)	$	89,686,478	100.0	%	$	93,047,209	100.0	%
Total LHFI:
Fixed rate	$	63,041,673	70.3	%	$	65,960,370	70.9	%
Variable rate	26,644,805		29.7	%	27,086,839		29.1	%
Total LHFI (1)	$	89,686,478	100.0	%	$	93,047,209	100.0	%

(1)Total LHFI includes unamortized deferred loan fees, net of deferred origination costs; unamortized purchase premiums, net of discounts; unamortized participation fees; accretable subvention; as well as purchase accounting adjustments. These items resulted in a net positive adjustment to the loan balances of $401.1 million and $475.0 million as of September 30, 2024 and December 31, 2023, respectively.

(2)Other commercial includes CEVF leveraged leases and loans.

(3)Other consumer primarily includes RV and marine loans.

Portfolio segments and classes

The Company discloses information about the credit quality of its financing receivables at disaggregated levels, specifically defined as “portfolio segments” and “classes,” based on management’s systematic methodology for determining the ACL. The Company utilizes similar categorization compared to the financial statement categorization of loans to model and calculate the ACL and track the credit quality, delinquency and impairment status of the underlying loan populations. In disaggregating its financing receivables portfolio, the Company’s methodology begins with the commercial and consumer segments.

The commercial segmentation reflects line of business distinctions. The CRE line of business includes C&I owner-occupied real estate and specialized lending for investment real estate. C&I includes non-real estate-related commercial loans. "Multifamily" represents loans for multifamily residential housing units. “Other commercial” includes loans to global customer relationships in Latin America which are not defined as commercial or consumer for regulatory purposes. The remainder of the portfolio primarily represents the CEVF portfolio.

The Company's portfolio classes are substantially the same as its financial statement categorization of loans for consumer loan populations. “Residential mortgages” includes mortgages on residential property, including single family and 1-4 family units. "Home equity loans and lines of credit" include all organic home equity contracts and purchased home equity portfolios. "RICs and auto loans" includes the Company's direct automobile loan portfolios but excludes RV and marine RICs. "Personal unsecured loans" includes personal revolving loans and credit cards. “Other consumer” includes an acquired portfolio of marine RICs and RV contracts.

16

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

ACL Rollforward by Portfolio Segment

The ACL is comprised of the ALLL and the reserve for unfunded lending commitments. The activity in the ACL by portfolio segment was as follows for the periods indicated:

	Three months ended September 30, 2024
(in thousands)	Commercial		Consumer		Total
ALLL, beginning of period	$	582,760	$	6,135,120	$	6,717,880
Credit loss expense	13,495		424,549		438,044
Charge-offs	(25,079)		(1,196,715)		(1,221,794)
Recoveries	18,182		609,118		627,300
Charge-offs, net of recoveries	$	(6,897)	$	(587,597)	$	(594,494)
ALLL, end of period	$	589,358	$	5,972,072	$	6,561,430
Reserve for unfunded lending commitments, beginning of period	$	50,052	$	3,042	$	53,094
Credit loss (benefit) on unfunded lending commitments	(6,447)		(258)		(6,705)
Reserve for unfunded lending commitments, end of period	$	43,605	$	2,784	$	46,389
Total ACL, end of period	$	632,963	$	5,974,856	$	6,607,819
	Three months ended September 30, 2023
(in thousands)	Commercial		Consumer		Total
ALLL, beginning of period	$	580,242	$	6,152,709	$	6,732,951
Credit loss expense	50,955		818,206		869,161
Charge-offs	(23,450)		(1,214,639)		(1,238,089)
Recoveries	14,781		605,662		620,443
Charge-offs, net of recoveries	$	(8,669)	$	(608,977)	$	(617,646)
ALLL, end of period	$	622,528	$	6,361,938	$	6,984,466
Reserve for unfunded lending commitments, beginning of period	$	78,446	$	7,281	$	85,727
Credit loss (benefit) on unfunded lending commitments	(11,645)		(1,224)		(12,869)
Reserve for unfunded lending commitments, end of period	$	66,801	$	6,057	$	72,858
Total ACL, end of period	$	689,329	$	6,367,995	$	7,057,324

17

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

	Nine months ended September 30, 2024
(in thousands)	Commercial		Consumer		Total
ALLL, beginning of period	$	616,788	$	6,315,265	$	6,932,053
Credit loss (benefit) / expense	3,251		1,328,691		1,331,942
Charge-offs	(77,698)		(3,579,151)		(3,656,849)
Recoveries	47,017		1,907,267		1,954,284
Charge-offs, net of recoveries	$	(30,681)	$	(1,671,884)	$	(1,702,565)
ALLL, end of period	$	589,358	$	5,972,072	$	6,561,430
Reserve for unfunded lending commitments, beginning of period	$	55,846	$	4,916	$	60,762
Credit loss (benefit) on unfunded lending commitments	(12,241)		(2,132)		(14,373)
Reserve for unfunded lending commitments, end of period	$	43,605	$	2,784	$	46,389
Total ACL, end of period	$	632,963	$	5,974,856	$	6,607,819
	Nine months ended September 30, 2023
(in thousands)	Commercial		Consumer		Total
ALLL, beginning of period	$	562,216	$	6,217,783	$	6,779,999
Day 1: Adjustment to allowance for adoption of ASU 2022-02	4,986		50,254		55,240
Credit loss expense	79,974		1,540,293		1,620,267
Charge-offs	(71,539)		(3,380,617)		(3,452,156)
Recoveries	46,891		1,934,225		1,981,116
Charge-offs, net of recoveries	$	(24,648)	$	(1,446,392)	$	(1,471,040)
ALLL, end of period	$	622,528	$	6,361,938	$	6,984,466
Reserve for unfunded lending commitments, beginning of period	$	77,709	$	7,873	$	85,582
Credit loss (benefit) on unfunded lending commitments	(10,908)		(1,816)		(12,724)
Reserve for unfunded lending commitments, end of period	$	66,801	$	6,057	$	72,858
Total ACL, end of period	$	689,329	$	6,367,995	$	7,057,324

18

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

The credit risk in the Company’s loan portfolios is driven by credit and collateral quality and is affected by borrower-specific and economy-wide factors. In general, there is an inverse relationship between the credit quality of loans and projections of impairment losses so that loans with better credit quality require a lower expected loss reserve. The Company manages this risk through its underwriting, pricing strategies, credit policy standards, and servicing guidelines and practices, as well as the application of geographic and other concentration limits.

The Company estimates CECL based on prospective information as well as account-level models based on historical data. Unemployment, HPI, CRE price index and used vehicle index growth rates, along with loan level characteristics, are the key inputs used in the models for prediction of the likelihood that the borrower will default in the forecasted period (the PD) and the loss in the event of default (the LGD). GDP is also a key input used in the models for the prediction of the likelihood that a borrower will default.

The Company has determined the reasonable and supportable period to be three years, at which time the economic forecasts generally tend to revert to historical averages. The Company also utilizes qualitative adjustments to capture any additional risks that may not be captured in either the economic forecasts or in the historical data, including consideration of several factors such as the interpretation of economic trends and uncertainties, changes in the nature and volume of loan portfolios, trends in delinquency and collateral values, and concentration risk.

The Company generally uses a third-party vendor's consensus baseline macroeconomic scenario for the quantitative estimate and additional positive and negative macroeconomic scenarios to make qualitative adjustments for macroeconomic uncertainty and considers adjustments to macroeconomic inputs and outputs based on market volatility. The baseline scenario was based on the latest consensus forecasts available which showed an improvement in key variables in the current quarter, including an expected improvement in unemployment rates (which is a key driver to losses) and the GDP growth rate, offset by expected worsening of the commercial real estate outlook (mainly office), indicating that there may be challenges ahead. The unemployment rate and used vehicle price index, which is a measure of wholesale used car price trends, are considered the most significant variables. Using the weighted-average of a range of economic forecast scenarios, we estimated at September 30, 2024 that the unemployment rate is expected to be approximately 4.5% at the end of 2024, better than our previous estimate of 5.0% at December 31, 2023 for that date. Additionally, the weighted used vehicle index, where a higher number corresponds to a higher used car price at auction, is estimated at September 30, 2024 to be approximately 193 at the end of 2024 compared to our estimate at December 31, 2023 of approximately 201 for that date. While the economy has seen significant recovery post-pandemic, there is still considerable uncertainty regarding overall lifetime loss estimates due to persistent inflation and high interest rates.

The Company's ACL was $6.6 billion at September 30, 2024, a decrease of $385.0 million from December 31, 2023. The decrease in the ACL was primarily driven by improvement in the macroeconomic outlook for certain macro variables, seasonally expected lower delinquencies in RICs and auto loans, sale of certain personal unsecured loans and off-balance sheet securitizations of RICs and auto loans and lower exposure in personal unsecured loans. The ACL for the consumer segment decreased by $345.3 million, and the ACL for the commercial segment decreased $39.7 million, at September 30, 2024 compared to December 31, 2023.

19

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

Non-accrual loans by Class of Financing Receivable

The amortized cost basis of financing receivables that are non-accrual and other non-performing assets disaggregated by class of financing receivables (as well as the amount of non-accrual loans for which no related allowance is recorded) are as follows at the dates indicated:

	Non-accrual loans and other non-performing assets as of:(1)				Non-accrual loans with no related allowance
(in thousands)	September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023
Non-accrual loans:
Commercial:
CRE	$	263,802	$	267,537	$	96,582	$	64,383
C&I	142,342		143,504		61,990		2,230
Multifamily	195,415		97,228		64,178		17,801
Other commercial	6,496		5,621		—		—
Total commercial loans	$	608,055	$	513,890	$	222,750	$	84,414
Consumer:
Residential mortgages	54,252		52,718		5,341		5,898
Home equity loans and lines of credit	71,884		86,332		13,931		15,241
RICs and auto loans	2,148,302		2,194,509		147,362		153,850
Personal unsecured loans	2,616		21,267		22		1,776
Other consumer	13,959		15,733		114		152
Total consumer loans	$	2,291,013	$	2,370,559	$	166,770	$	176,917
Total non-accrual loans	$	2,899,068	$	2,884,449	$	389,520	$	261,331
OREO	19,482		24,246		—		—
Repossessed vehicles	251,238		265,368		—		—
Foreclosed and other repossessed assets	23,276		1,666		—		—
Total OREO and other repossessed assets	$	293,996	$	291,280	$	—	$	—
Total non-performing assets	$	3,193,064	$	3,175,729	$	389,520	$	261,331
(1) Interest income recognized on a cash basis on nonaccrual loans was $61.2 million and $178.1 million for the three months and nine months ended September 30, 2024, respectively, and $54.8 million and $146.3 million for the three months and nine months ended September 30, 2023, respectively.

20

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

Age Analysis of Past Due Loans

The Company generally considers an account delinquent when an obligor fails to pay substantially all (defined as 90%) of the scheduled payment by the due date. When an account is deferred, the loan is returned to accrual status during the deferral period and accrued interest related to the loan is evaluated for collectability.

The amortized cost of past due loans and accruing loans 90 days or greater past due disaggregated by class of financing receivables is summarized as follows at the dates indicated:

As of:	September 30, 2024
(in thousands)	30-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Financing Receivables		Amortized Cost > 90 Days and Accruing
Commercial:
CRE (2)	$	128,170	$	138,429	$	266,599	$	8,583,190	$	8,849,789	$	4,331
C&I (1)	47,239		11,551		58,790		9,903,134		9,961,924		—
Multifamily (4)	39,363		133,737		173,100		9,809,621		9,982,721		—
Other commercial	59,966		3,043		63,009		7,455,797		7,518,806		—
Consumer:
Residential mortgages (3)	77,190		49,237		126,427		5,276,525		5,402,952		—
Home equity loans and lines of credit	30,996		59,340		90,336		2,078,804		2,169,140		—
RICs and auto loans(5)	5,316,278		533,526		5,849,804		39,387,042		45,236,846		—
Personal unsecured loans	43,495		22,985		66,480		1,843,245		1,909,725		7,283
Other consumer	1,209		217		1,426		38,949		40,375		—
Total	$	5,743,906	$	952,065	$	6,695,971	$	84,376,307	$	91,072,278	$	11,614

(1) C&I loans includes $171.1 million of LHFS at September 30, 2024.

(2) CRE loans includes $23.7 million LHFS at September 30, 2024.

(3) Residential mortgages include $883.6 million of LHFS at September 30, 2024.

(4) Multifamily loans include no of LHFS at September 30, 2024.

(5) RICs and auto loans include $307.4 million of LHFS at September 30, 2024.

As of:	December 31, 2023
(in thousands)	30-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Financing Receivables		Recorded Investment > 90 Days and Accruing
Commercial:
CRE (2)	$	98,799	$	62,645	$	161,444	$	8,586,100	$	8,747,544	$	—
C&I (1)	54,367		12,260		66,627		11,246,726		11,313,353		—
Multifamily (4)	—		62,391		62,391		10,495,778		10,558,169		—
Other commercial	48,075		3,260		51,335		7,424,778		7,476,113		—
Consumer:
Residential mortgages (3)	99,171		47,019		146,190		4,689,491		4,835,681		—
Home equity loans and lines of credit	36,297		71,936		108,233		2,340,221		2,448,454		—
RICs and auto loans	5,393,627		558,208		5,951,835		37,753,524		43,705,359		—
Personal unsecured loans	84,379		44,389		128,768		3,933,932		4,062,700		7,947
Other consumer	2,213		345		2,558		57,396		59,954		—
Total	$	5,816,928	$	862,453	$	6,679,381	$	86,527,946	$	93,207,327	$	7,947

(1)C&I loans included $131.4 million of LHFS at December 31, 2023.

(2)CRE loans includes no LHFS at December 31, 2023.

(3) Residential mortgages included $19.5 million of LHFS at December 31, 2023.

(4) Multifamily loans include $9.3 million of LHFS at December 31, 2023.

21

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

Commercial Lending Asset Quality Indicators

The Company's Risk Department performs a credit analysis and classifies certain loans over an internal threshold based on the commercial lending classifications described below:

PASS. Asset is well-protected by the current net worth and paying capacity of the obligor or guarantors, if any, or by the fair value less costs to acquire and sell any underlying collateral in a timely manner.

SPECIAL MENTION. Asset has potential weaknesses that deserve management’s close attention, which, if left uncorrected, may result in deterioration of the repayment prospects for an asset at some future date. Special mention assets are not adversely classified.

SUBSTANDARD. Asset is inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. A well-defined weakness or weaknesses exist that jeopardize the liquidation of the debt. The loans are characterized by the distinct possibility that the Company will sustain some loss if deficiencies are not corrected.

DOUBTFUL. Exhibits the inherent weaknesses of a substandard credit. Additional characteristics exist that make collection or liquidation in full highly questionable and improbable, on the basis of currently known facts, conditions and values. Possibility of loss is extremely high, but because of certain important and reasonable specific pending factors which may work to the advantage and strengthening of the credit, an estimated loss cannot yet be determined.

LOSS. Credit is considered uncollectible and of such little value that it does not warrant consideration as an active asset. There may be some recovery or salvage value, but there is doubt as to whether, how much or when the recovery would occur.

22

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

Each commercial loan is evaluated to determine its risk rating at least annually. The indicators represent the rating for loans as of the date presented based on the most recent assessment performed. Amortized cost basis of loans in the commercial portfolio segment by credit quality indicator, class of financing receivable, and year of origination are summarized as follows:

September 30, 2024	Commercial Loan Portfolio (2)
(dollars in thousands)	Amortized Cost by Origination Year
Regulatory Rating:	2024(1)		2023		2022		2021		2020		Prior		Total (3)
CRE
Pass	$	256,796	$	610,455	$	2,706,731	$	1,410,484	$	792,410	$	1,578,692	$	7,355,568
Special mention	—		9,026		344,964		326,474		6,486		166,243		853,193
Substandard	29,544		10,808		129,599		152,733		66,216		203,639		592,539
Doubtful	—		—		—		—		—		48,489		48,489
Total CRE	$	286,340	$	630,289	$	3,181,294	$	1,889,691	$	865,112	$	1,997,063	$	8,849,789
Current period gross write-offs - CRE	$	3,062	$	—	$	—	$	13,584	$	—	$	652	$	17,298
C&I
Pass	$	972,932	$	861,445	$	1,958,989	$	1,303,434	$	551,268	$	2,826,966	$	8,475,034
Special mention	12,062		43,724		165,264		74,346		12,851		122,125		430,372
Substandard	—		28,994		38,232		60,998		8,566		177,240		314,030
N/A	239,186		203,686		182,073		80,432		22,319		14,792		742,488
Total C&I	$	1,224,180	$	1,137,849	$	2,344,558	$	1,519,210	$	595,004	$	3,141,123	$	9,961,924
Current period gross write-offs - C&I	$	784	$	9,888	$	16,360	$	8,083	$	3,925	$	5,572	$	44,612
Multifamily
Pass	$	57,650	$	1,036,618	$	2,729,919	$	1,223,663	$	933,110	$	2,102,434	$	8,083,394
Special mention	—		196,300		281,474		108,231		60,764		222,532		869,301
Substandard	—		21,345		368,680		177,501		88,687		373,813		1,030,026
Total multifamily	$	57,650	$	1,254,263	$	3,380,073	$	1,509,395	$	1,082,561	$	2,698,779	$	9,982,721
Current period gross write-offs - Multifamily	$	—	$	—	$	—	$	—	$	—	$	6,072	$	6,072
Remaining commercial
Pass	$	2,776,994	$	1,631,160	$	1,180,084	$	693,266	$	316,259	$	909,679	$	7,507,442
Special mention	—		—		264		2,588		—		—		2,852
Substandard	—		1,035		2,107		1,249		497		3,624		8,512
Total remaining commercial	$	2,776,994	$	1,632,195	$	1,182,455	$	697,103	$	316,756	$	913,303	$	7,518,806
Current period gross write-offs - Remaining commercial	$	—	$	256	$	12	$	19	$	—	$	9,429	$	9,716
Total commercial loans
Pass	$	4,064,372	$	4,139,678	$	8,575,723	$	4,630,847	$	2,593,047	$	7,417,771	$	31,421,438
Special mention	12,062		249,050		791,966		511,639		80,101		510,900		2,155,718
Substandard	29,544		62,182		538,618		392,481		163,966		758,316		1,945,107
Doubtful	—		—		—		—		—		48,489		48,489
N/A	239,186		203,686		182,073		80,432		22,319		14,792		742,488
Total commercial loans	$	4,345,164	$	4,654,596	$	10,088,380	$	5,615,399	$	2,859,433	$	8,750,268	$	36,313,240
Current period gross write-offs - Total commercial	$	3,846	$	10,144	$	16,372	$	21,686	$	3,925	$	21,725	$	77,698

(1)Loans originated during the nine months ended September 30, 2024.

(2)Includes $194.8 million of LHFS at September 30, 2024.

(3)Includes $17.4 million revolving loans converted to term loans.

23

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

December 31, 2023	Commercial Loan Portfolio (2)
(dollars in thousands)	Amortized Cost by Origination Year
Regulatory Rating:	2023(1)		2022		2021		2020		2019		Prior		Total (3)
CRE
Pass	$	353,350	$	1,947,060	$	1,800,140	$	1,108,882	$	674,347	$	1,343,095	$	7,226,874
Special mention	3,747		178,287		145,212		102,550		245,385		114,666		789,847
Substandard	—		112,872		188,061		63,806		85,138		232,168		682,045
Doubtful	—		—		—		—		48,778		—		48,778
Total CRE	$	357,097	$	2,238,219	$	2,133,413	$	1,275,238	$	1,053,648	$	1,689,929	$	8,747,544
Current period gross write-offs - CRE	$	—	$	—	$	37,982	$	—	$	28,626	$	8,637	$	75,245
C&I
Pass	$	1,073,864	$	2,930,616	$	1,941,561	$	1,002,562	$	993,395	$	1,923,607	$	9,865,605
Special mention	6,256		96,218		4,695		2,668		10,686		139,360		259,883
Substandard	100		14,786		82,563		70,458		50,881		230,798		449,586
N/A	272,220		259,671		126,449		41,229		32,916		5,794		738,279
Total C&I	$	1,352,440	$	3,301,291	$	2,155,268	$	1,116,917	$	1,087,878	$	2,299,559	$	11,313,353
Current period gross write-offs - C&I	$	3,440	$	20,806	$	12,749	$	5,012	$	11,287	$	19,224	$	72,518
Multifamily
Pass	$	1,147,959	$	3,000,968	$	1,358,513	$	949,385	$	1,422,205	$	1,289,127	$	9,168,157
Special mention	116,789		107,137		101,850		—		160,535		72,513		558,824
Substandard	—		302,057		128,023		61,041		172,983		167,084		831,188
Total multifamily	$	1,264,748	$	3,410,162	$	1,588,386	$	1,010,426	$	1,755,723	$	1,528,724	$	10,558,169
Current period gross write-offs - Multifamily	$	—	$	—	$	—	$	—	$	1,267	$	2,684	$	3,951
Remaining commercial
Pass	$	3,154,497	$	1,598,202	$	1,157,726	$	491,229	$	248,309	$	811,827	$	7,461,790
Special mention	—		355		3,624		—		—		1,410		5,389
Substandard	283		2,262		1,524		765		311		3,789		8,934
Total remaining commercial	$	3,154,780	$	1,600,819	$	1,162,874	$	491,994	$	248,620	$	817,026	$	7,476,113
Current period gross write-offs - Remaining commercial	$	205	$	—	$	27	$	—	$	—	$	6,211	$	6,443
Total commercial loans
Pass	$	5,729,670	$	9,476,846	$	6,257,940	$	3,552,058	$	3,338,256	$	5,367,656	$	33,722,426
Special mention	126,792		381,997		255,381		105,218		416,606		327,949		1,613,943
Substandard	383		431,977		400,171		196,070		309,313		633,839		1,971,753
Doubtful	—		—		—		—		48,778		—		48,778
N/A	272,220		259,671		126,449		41,229		32,916		5,794		738,279
Total commercial loans	$	6,129,065	$	10,550,491	$	7,039,941	$	3,894,575	$	4,145,869	$	6,335,238	$	38,095,179
Current period gross write-offs - Total commercial	$	3,645	$	20,806	$	50,758	$	5,012	$	41,180	$	36,756	$	158,157

(1)Loans originated during the year ended December 31, 2023.

(2)Includes $140.7 million of LHFS at December 31, 2023.

(3)Includes $126.6 million revolving loans converted to term loans.

24

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

Consumer Lending Asset Quality Indicators-Credit Score

Consumer financing receivables for which either an internal or external credit score is a core component of the allowance model are summarized by credit score determined at origination as follows:

RICs and Auto Loans

As of September 30, 2024	RICs and auto loans
(dollars in thousands)	Amortized Cost by Origination Year (3)
Credit Score Range	2024(1)		2023		2022		2021		2020		Prior		Total		Percent
No FICO (2)	$	1,101,757	$	716,805	$	503,376	$	262,424	$	95,992	$	81,013	$	2,761,367	6.1	%
<600	4,929,866		4,211,429		3,019,848		1,693,242		542,714		615,344		15,012,443		33.4	%
600-639	2,921,094		2,455,703		1,770,177		786,442		200,979		212,613		8,347,008		18.6	%
640-679	2,113,659		1,534,270		1,120,540		430,285		106,880		107,094		5,412,728		12.0	%
680-719	1,554,647		1,132,789		783,292		391,646		157,161		94,403		4,113,938		9.2	%
720-759	1,018,545		735,921		592,627		379,878		157,856		66,851		2,951,678		6.6	%
>=760	2,274,911		1,151,505		1,315,846		1,068,467		402,633		116,919		6,330,281		14.1	%
Total	$	15,914,479	$	11,938,422	$	9,105,706	$	5,012,384	$	1,664,215	$	1,294,237	$	44,929,443	100.0	%
Current period gross write-offs - RICs and auto loans	$	244,469	$	1,178,828	$	1,024,015	$	507,661	$	325,958	$	8,533	$	3,289,464

(1)    Loans originated during the nine months ended September 30, 2024.

(2)     Consists primarily of loans for which credit scores are not available or are not considered in the ALLL model.

(3)    Excludes LHFS.

As of December 31, 2023	RICs and auto loans
(dollars in thousands)	Amortized Cost by Origination Year (3)
Credit Score Range	2023(1)		2022		2021		2020		2019		Prior		Total		Percent
No FICO (2)	$	1,075,125	$	763,677	$	445,542	$	193,922	$	120,752	$	61,909	$	2,660,927	6.1	%
<600	5,578,707		4,219,184		2,791,141		1,093,652		778,438		458,350		14,919,472		34.1	%
600-639	3,324,732		2,483,763		1,324,435		439,996		303,441		138,715		8,015,082		18.3	%
640-679	2,535,908		1,567,064		718,649		234,883		169,431		69,668		5,295,603		12.1	%
680-719	1,754,195		1,092,896		612,871		268,978		159,209		39,934		3,928,083		9.0	%
720-759	1,052,128		830,476		583,392		256,724		122,537		24,692		2,869,949		6.6	%
>=760	1,574,026		1,847,059		1,644,605		654,214		267,443		28,896		6,016,243		13.8	%
Total	$	16,894,821	$	12,804,119	$	8,120,635	$	3,142,369	$	1,921,251	$	822,164	$	43,705,359	100.0	%
Current period gross write-offs - RICs and auto loans	$	479,992	$	1,943,905	$	1,052,016	$	366,896	$	245,621	$	194,308	$	4,282,738

(1)    Loans originated during the year ended December 31, 2023.

(2)     Consists primarily of loans for which credit scores are not available or are not considered in the ALLL model.

(3)    Excludes LHFS.

25

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

Personal Unsecured Loans

As of September 30, 2024	Personal Unsecured loans
(dollars in thousands)	Amortized Cost by Origination Year
Credit Score Range	2024(1)		2023		2022		2021		2020		Prior		Total		Percent
No FICO (2)	$	11,343	$	—	$	—	$	—	$	—	$	44	$	11,387	0.6	%
<600	23		49		54		65		30		2,823		3,044		0.2	%
600-639	467		5,283		7,296		858		253		5,448		19,605		1.0	%
640-679	10,249		58,362		41,292		6,745		2,279		29,599		148,526		7.8	%
680-719	98,294		201,453		119,233		29,520		5,803		63,217		517,520		27.1	%
720-759	142,546		204,439		154,119		43,381		5,696		63,133		613,314		32.1	%
>=760	169,523		175,356		130,864		47,749		6,229		66,608		596,329		31.2	%
Total	$	432,445	$	644,942	$	452,858	$	128,318	$	20,290	$	230,872	$	1,909,725	100.0	%
Current period gross write-offs - Personal unsecured loans	$	2,222	$	106,271	$	133,999	$	35,426	$	1,851	$	5,286	$	285,055

(1)    Loans originated during the nine months ended September 30, 2024.

(2)     Consists primarily of loans for which credit scores are not available or are not considered in the ALLL model.

As of December 31, 2023	Personal Unsecured loans
(dollars in thousands)	Amortized Cost by Origination Year
Credit Score Range	2023(1)		2022		2021		2020		2019		Prior		Total		Percent
No FICO (2)	$	8,080	$	—	$	—	$	—	$	—	$	49	$	8,129	0.2	%
<600	40		62		57		35		32		2,883		3,109		0.1	%
600-639	7,634		11,300		1,205		418		390		5,752		26,699		0.7	%
640-679	175,427		228,631		30,445		3,442		2,479		31,341		471,765		11.6	%
680-719	610,259		599,431		154,687		10,264		5,721		69,897		1,450,259		35.6	%
720-759	511,424		444,493		181,398		15,625		5,847		70,518		1,229,305		30.3	%
>=760	350,721		274,043		148,550		20,357		6,020		73,743		873,434		21.5	%
Total	$	1,663,585	$	1,557,960	$	516,342	$	50,141	$	20,489	$	254,183	$	4,062,700	100.0	%
Current period gross write-offs - Personal unsecured loans	$	30,001	$	179,550	$	75,237	$	4,837	$	2,205	$	5,621	$	297,451

(1)    Loans originated during the year ended December 31, 2023.

(2)     Consists primarily of loans for which credit scores are not available or are not considered in the ALLL model.

26

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

Consumer Lending Asset Quality Indicators-FICO and LTV Ratio

For both residential and home equity loans, loss severity assumptions are incorporated in the loan and lease loss reserve models to estimate loan balances that will ultimately charge off. These assumptions are based on recent loss experience within various current LTV bands within these portfolios. LTVs are refreshed quarterly by applying Federal Housing Finance Agency Home price index changes at a state-by-state level to the last known appraised value of the property to estimate the current LTV. The Company's CECL loss calculation incorporates the refreshed LTV information to update the distribution of defaulted loans by LTV as well as the associated LGD for each LTV band. Reappraisals on a recurring basis at the individual property level are not considered cost-effective or necessary; however, reappraisals are performed on certain higher risk accounts to support line management activities, default servicing decisions, or when other situations arise for which, the Company believes the additional expense is warranted.

FICO scores are refreshed quarterly, where possible. The indicators disclosed represent the credit scores for loans as of the date presented based on the most recent assessment performed.

Residential mortgage and home equity financing receivables by LTV and FICO range are summarized as follows:

As of September 30, 2024	Amortized Cost by Origination Year (4)
(dollars in thousands)
Residential mortgages	2024(1)		2023(1)		2022		2021		2020		Prior		Grand Total		Revolving Loans
LTV ratios (3)
No LTV available (2)	$	—	$	—	$	—	$	—	$	—	$	2,067	$	2,067	$	—
<= 70%	—		—		200,272		1,024,603		838,798		2,367,034		4,430,707		—
70.01% - 110%	—		—		62,029		21,106		—		3,060		86,195		—
Greater than 110%	—		—		—		—		—		365		365		—
Total residential mortgages	$	—	$	—	$	262,301	$	1,045,709	$	838,798	$	2,372,526	$	4,519,334	$	—
FICO scores
No FICO score available	$	—	$	—	$	—	$	—	$	—	$	2,293	$	2,293	$	—
<600	—		—		14,835		22,192		16,117		134,507		187,651		—
600-679	—		—		19,849		41,681		32,299		212,729		306,558		—
680-759	—		—		66,449		224,614		179,037		636,762		1,106,862		—
>=760	—		—		161,168		757,222		611,345		1,386,235		2,915,970		—
Total residential mortgages	$	—	$	—	$	262,301	$	1,045,709	$	838,798	$	2,372,526	$	4,519,334	$	—
Current period gross write-offs - Residential mortgages	$	—	$	—	$	26	$	63	$	17	$	46	$	152
Home equity
LTV ratios
No LTV available (2)	$	—	$	—	$	1,784	$	4,855	$	4,649	$	51,852	$	63,140	$	41,583
<= 70%	—		—		40,883		156,379		163,896		1,732,105		2,093,263		2,018,440
70.01% - 110%	—		—		3,523		1,516		—		6,019		11,058		9,618
Greater than 110%	—		—		881		344		—		454		1,679		1,679
Total home equity	$	—	$	—	$	47,071	$	163,094	$	168,545	$	1,790,430	$	2,169,140	$	2,071,320
FICO scores
No FICO score available	$	—	$	—	$	690	$	2,392	$	2,471	$	48,892	$	54,445	$	32,893
<600	—		—		949		3,056		5,267		129,843		139,115		119,552
600-679	—		—		2,414		11,918		11,242		214,660		240,234		222,590
680-759	—		—		18,092		51,651		52,538		569,462		691,743		674,872
>=760	—		—		24,926		94,077		97,027		827,573		1,043,603		1,021,413
Total home equity	$	—	$	—	$	47,071	$	163,094	$	168,545	$	1,790,430	$	2,169,140	$	2,071,320
Current period gross write-offs - home equity	$	—	$	—	$	—	$	—	$	—	$	2,662	$	2,662

(1) The Company ceased origination of new residential mortgage and home equity loans in 2022.

(2) Balances in the "No LTV available" or "No FICO score available" ranges primarily represent loans serviced by others, in run-off portfolios or for which a current LTV or FICO score is unavailable.

(3) The ALLL model considers LTV for financing receivables in first lien position and CLTV for financing receivables in second lien position for the Company.

(4) Excludes LHFS.

27

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

As of December 31, 2023	Amortized Cost by Origination Year (4)
(dollars in thousands)
Residential mortgages	2023(1)		2022		2021		2020		2019		Prior		Grand Total		Revolving Loans
LTV ratios (3)
No LTV available (2)	$	—	$	—	$	—	$	—	$	—	$	2,156	$	2,156	$	—
<= 70%	—		190,214		1,024,024		880,476		590,828		1,977,309		4,662,851		—
70.01% - 110%	—		83,925		61,624		—		—		5,287		150,836		—
Greater than 110%	—		—		—		—		—		375		375		—
Total residential mortgages	$	—	$	274,139	$	1,085,648	$	880,476	$	590,828	$	1,985,127	$	4,816,218	$	—
FICO scores
No FICO score available	$	—	$	—	$	—	$	—	$	—	$	2,926	$	2,926	$	—
<600	—		9,909		15,601		13,053		30,094		109,302		177,959		—
600-679	—		20,516		43,327		32,157		51,103		189,585		336,688		—
680-759	—		83,098		256,737		202,173		160,961		517,085		1,220,054		—
>=760	—		160,616		769,983		633,093		348,670		1,166,229		3,078,591		—
Total residential mortgages	$	—	$	274,139	$	1,085,648	$	880,476	$	590,828	$	1,985,127	$	4,816,218	$	—
Current period gross write-offs - Residential mortgages	$	—	$	33	$	22	$	—	$	16	$	182	$	253
Home equity
LTV ratios
No LTV available (2)	$	—	$	1,577	$	3,904	$	3,848	$	3,747	$	53,593	$	66,669	$	42,375
<= 70%	—		43,661		168,205		179,258		230,879		1,737,887		2,359,890		2,285,157
70.01% - 110%	—		3,742		1,968		—		23		13,630		19,363		16,576
Greater than 110%	—		607		156		—		—		1,769		2,532		2,532
Total home equity	$	—	$	49,587	$	174,233	$	183,106	$	234,649	$	1,806,879	$	2,448,454	$	2,346,640
FICO scores
No FICO score available	$	—	$	703	$	2,471	$	2,597	$	3,328	$	52,044	$	61,143	$	36,854
<600	—		430		2,774		3,942		6,652		126,607		140,405		123,232
600-679	—		3,325		8,624		9,080		24,357		215,826		261,212		242,747
680-759	—		16,781		60,151		61,256		73,166		576,663		788,017		771,495
>=760	—		28,348		100,213		106,231		127,146		835,739		1,197,677		1,172,312
Total home equity	$	—	$	49,587	$	174,233	$	183,106	$	234,649	$	1,806,879	$	2,448,454	$	2,346,640
Current period gross write-offs - home equity	$	—	$	—	$	—	$	253	$	17	$	1,330	$	1,600

(1) The Company ceased origination of new residential mortgage and home equity loans in 2022.

(2) Balances in the "No LTV available" or "No FICO score available" ranges primarily represent loans serviced by others, in run-off portfolios or for which a current LTV or FICO score is unavailable.

(3) The ALLL model considers LTV for financing receivables in first lien position and CLTV for financing receivables in second lien position for the Company.

(4) Excludes LHFS.

During the nine months ended September 30, 2024, the Company reported $1.8 million in gross charge-offs related to other consumer portfolios.

28

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

Loan Modifications

Occasionally the Company modifies loans to customers in financial difficulty by providing term extensions, payment deferrals, and interest rate reductions. When a loan is modified, the related unamortized net fees and costs and any prepayment penalties are carried forward and any fees received, and direct loan origination costs associated with the refinancing or restructuring, are deferred. Additionally, the EIR is recalculated based upon the amortized cost basis of the modified loan and its revised contractual cash flows. If the modification results in a new loan, unamortized fees and costs from the original loan are recognized into income.

All of the Company’s commercial loan modifications are based on the circumstances of the individual customer, including specific customers' complete relationship with the Company. Loan terms are modified to meet each borrower’s specific circumstances at a point in time and may allow for modifications such as term extensions, covenant waivers, payment holidays and interest rate reductions. Commercial loan modifications are generally restructured to allow for an upgraded risk rating and return to accrual status after a sustained period of payment performance has been achieved (typically 12 months for monthly payment schedules).

The primary modification program for the Company’s residential mortgage and home equity portfolios is a proprietary program designed to keep customers in their homes and, when appropriate, prevent them from entering into foreclosure. The program is available to all customers facing a financial hardship regardless of their delinquency status. The main goal of the modification program is to review the customer’s entire financial condition to ensure that the proposed modified payment solution is affordable according to a specific DTI ratio range. The main modification benefits of the program allow for term extensions, interest rate reductions, and/or deferment of principal. The Company reviews each customer on a case-by-case basis to determine which benefit or combination of benefits will be offered to achieve the target DTI range.

For RICs and auto loans, the Company at times offers deferrals under which the consumer is allowed to defer a maximum of three payments per event to the end of the loan. We limit the frequency of each new deferral that may be granted to one deferral after completion of at least eight payments from origination and eight payments between each extension. The maximum number of months extended for the life of the loan for all automobile RICs is eight for non-natural disaster extensions and twelve for natural disaster extensions. Some marine and RV contracts also have a maximum of twelve months extension to reflect their longer terms. Additionally, we generally limit the granting of deferrals on new accounts until a requisite number of payments has been received. During the deferral period, we continue to accrue and collect interest on the loan in accordance with the terms of the deferral agreement. Some auto loan modifications include a reduction of the interest rate and may include an extension of term to eligible borrowers at risk of default and repossession of the financed vehicle.

When estimating the ACL, the Company uses a statistical methodology based on an expected credit loss approach that focuses on forecasting the expected credit loss components (i.e., PD, payoff, LGD and EAD) on a loan level basis to estimate the expected future lifetime losses. This methodology generally does not change when loans are modified. However, the Company monitors credit quality indicators and delinquency, and adjusts the allowance as those factors change. The Company generally uses a DCF approach for large impaired commercial loans. For all collateral-dependent loans, the Company measures the ACL as the difference between the asset’s amortized cost basis and the fair value of the underlying collateral as of the reporting date, adjusted for expected costs to sell. Refer to Note 1 for more information on the ACL.

The following table shows the amortized cost basis at the end of the reporting period for loans modified during the reporting period to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of modification granted. Short-term modifications (three months or less) are not included in these tables.

29

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

	Amortized Cost
	Three months ended								Three months ended
	September 30, 2024								September 30, 2023
(dollars in thousands):	Payment Deferral Only		All Other Modifications		Total		% of Total Class of Financing Receivable		Payment Deferral Only		All Other Modifications		Total		% of Total Class of Financing Receivable
Commercial:
CRE	$	112,108	$	66,090	$	178,198	2.02	%	$	64,427	$	—	$	64,427	0.75	%
C&I	5,838		13,141		18,979		0.19	%	23,758		36,933		60,691		0.49	%
Multifamily	99,439		75,325		174,764		1.75	%	59,521		—		59,521		0.55	%
Consumer:
Residential mortgages	—		2,533		2,533		0.06	%	—		1,890		1,890		0.04	%
Home equity loans and lines of credit	—		1,305		1,305		0.06	%	—		1,167		1,167		0.05	%
RICs and auto loans	386,084		37,706		423,790		0.94	%	261,306		90,928		352,234		0.78	%
Total	$	603,469	$	196,100	$	799,569	0.89	%	$	409,012	$	130,918	$	539,930	0.56	%
	Amortized Cost
	Nine months ended								Nine months ended
	September 30, 2024								September 30, 2023
(dollars in thousands):	Payment Deferral Only		All Other Modifications		Total		% of Total Class of Financing Receivable		Payment Deferral Only		All Other Modifications		Total		% of Total Class of Financing Receivable
Commercial:
CRE	$	246,517	$	101,410	$	347,927	3.94	%	$	64,600	$	—	$	64,600	0.75	%
C&I	8,296		85,287		93,583		0.96	%	71,824		38,446		110,270		0.89	%
Multifamily	99,439		75,325		174,764		1.75	%	62,342		—		62,342		0.58	%
Other commercial	—		160		160		—	%	—		23		23		—	%
Consumer:
Residential mortgages	—		2,811		2,811		0.06	%	—		3,757		3,757		0.08	%
Home equity loans and lines of credit	—		4,743		4,743		0.22	%	—		3,865		3,865		0.15	%
RICs and auto loans	824,913		80,713		905,626		2.02	%	608,640		331,107		939,747		2.09	%
Total	$	1,179,165	$	350,449	$	1,529,614	1.71	%	$	807,406	$	377,198	$	1,184,604	1.23	%

30

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

The following table describes the financial effects of the modifications made to borrowers experiencing financial difficulty:

Loan Type	Modification Type	Financial Effect
RICs and auto loans	Payment deferral	Provide payment deferrals to borrowers through our deferral program, which allows a customer to defer payments for a maximum of up to eight months over the life of the loan. The deferred payments are added to the end of the original loan term.
Commercial loans	Payment deferral	Provide payment deferrals to commercial borrowers through our deferral program. The deferred payments are added to the end of the original loan term.
Consumer secured by real estate	All other modification types	Provide modifications consisting of a combination of term extension, interest rate reduction, and/or deferment of principal on a case-by-case basis to determine which benefit or combination of benefits will be offered to achieve the target DTI range.
RICs and auto loans	All other modification types	Provides reduction in interest rate and maturity date extension of up to 36 months beyond the current maturity date resulting in reduction to monthly payment.

31

NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)

Performance of Modified Loans

The Company monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the 12- month period prior to period-end:

	Amortized Cost						Amortized Cost(1)
	As of September 30, 2024						As of September 30, 2023
(in thousands)	Current		30-89 DPD		90+ DPD		Current		30-89 DPD		90+ DPD
Commercial:
CRE	$	409,566	$	35,319	$	—	$	64,600	$	—	$	—
C&I	191,306		4,565		939		82,602		27,378		290
Multifamily	130,096		53,486		—		56,627		—		5,715
Other commercial	275		—		—		23		—		—
Consumer:
Residential mortgages	3,356		241		—		3,202		555		—
Home equity loans and lines of credit	6,471		17		168		3,613		40		212
RICs and auto loans	766,107		313,047		25,580		649,146		266,772		23,829
Total	$	1,507,177	$	406,675	$	26,687	$	859,813	$	294,745	$	30,046

(1) Reflects the adoption of ASU 2022-02 on January 1, 2023 and includes only loans modified after January 1, 2023.

Payment Defaults Which Have Had a Prior Modification

A modified loan is generally considered to have subsequently defaulted if, after modification, the loan becomes 90 DPD. For RICs, a modified loan is considered to have subsequently defaulted after modification at the earlier of the date of repossession or 120 DPD. Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Refer to Note 1 to our most recent Annual Report on Form 10-K for 2023 for more information on the Company's charge-off policy. The following table provides the amortized cost basis of financing receivables that had a payment default during the period and were modified in the 12-month period prior to default due to the borrower's financial difficulty:

	Amortized Cost								Amortized Cost
	Three months ended								Nine months ended
	September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
	Payment deferral		All other modification types		Payment deferral(1)		All other modification types(1)		Payment deferral		All other modification types		Payment deferral(1)		All other modification types(1)
(in thousands)
Commercial:
C&I	$	1,064	$	13	$	391	$	93	$	1,630	$	87	$	548	$	118
Consumer:
Residential mortgages	—		—		—		—		—		47		—		—
Home equity loans and lines of credit	—		84		—		—		—		168		—		—
RICs and auto loans	39,354		947		21,327		14,145		101,644		12,748		28,514		18,207
Total	$	40,418	$	1,044	$	21,718	$	14,238	$	103,274	$	13,050	$	29,062	$	18,325

(1) Reflects the adoption of ASU 2022-02 on January 1, 2023 and includes only loans modified after January 1, 2023.

32

NOTE 4. OPERATING LEASE ASSETS, NET

The Company has operating leases, including leased vehicles, which are included in the Company's Condensed Consolidated Balance Sheets as Operating lease assets, net.

Operating lease assets, net consisted of the following as of the periods indicated:

(in thousands)	September 30, 2024		December 31, 2023
Leased vehicles	$	15,660,561	$	17,548,952
Less: accumulated depreciation	(3,046,914)		(3,546,875)
Depreciated net capitalized cost	$	12,613,647	$	14,002,077
Manufacturer subvention payments, net of accretion	(610,242)		(593,004)
Unamortized origination fees and other costs	513,130		373,767
Leased vehicles, net	$	12,516,535	$	13,782,840
Total operating lease assets, net	$	12,516,535	$	13,782,840

The following summarizes the future minimum rental payments due to the Company as lessor under operating leases as of September 30, 2024 (in thousands):

2024	$	569,755
2025	1,825,180
2026	1,106,293
2027	223,834
2028	4,396
Thereafter	—
Total	$	3,729,458

During the three months and nine months ended September 30, 2024, the Company recognized $17.5 million and $61.8 million, respectively, of net gains on the sale of operating lease assets that had been returned to the Company at the end of the lease term, compared to $12.9 million and $55.3 million recognized during the three months and nine months ended September 30, 2023, respectively. These amounts are recorded within Miscellaneous income, net in the Company's Condensed Consolidated Statements of Operations.

NOTE 5. GOODWILL AND OTHER INTANGIBLES

Goodwill

Goodwill is assigned to reporting units, which are operating segments or one level below an operating segment, as of the acquisition date. The following table presents the balance of the Company's goodwill by its reporting units for the periods indicated:

(in thousands)	Auto		CBB		C&I		CRE		CIB		Total
December 31, 2023 and September 30, 2024	$	1,238,676	$	159,027	$	52,198	$	1,015,130	$	301,634	$	2,766,665

During the three months and nine months ended September 30, 2024, there were no additions, re-allocations, impairments, or disposals of goodwill. During the first quarter of 2023, there was an immaterial adjustment to the value of goodwill acquired in connection with the 2022 acquisition of PCH. There were no other additions, re-allocations, impairments, or disposals of goodwill during the three months and nine months ended September 30, 2023.

33

NOTE 5. GOODWILL AND OTHER INTANGIBLES (continued)

The Company evaluates goodwill for impairment at the reporting unit level. The Company conducted its last annual goodwill impairment tests as of October 1, 2023 using generally accepted valuation methods. As a result of that impairment test, no goodwill impairment was identified.

Other Intangible Assets

The following table details amounts related to the Company's intangible assets subject to amortization for the dates indicated:

	September 30, 2024				December 31, 2023
(in thousands)	Net Carrying Amount		Accumulated Amortization		Net Carrying Amount		Accumulated Amortization
Intangibles subject to amortization:
Dealer networks	$	219,333	$	(250,667)	$	236,958	$	(233,042)
Stellantis relationship	2,666		(136,084)		5,436		(133,314)
Other intangibles	36,452		(47,559)		44,765		(47,539)
Total intangibles subject to amortization	$	258,451	$	(434,310)	$	287,159	$	(413,895)

At September 30, 2024 and December 31, 2023, the Company did not have any intangibles, other than goodwill, which were not subject to amortization.

Amortization expense on intangible assets was $9.5 million and $28.7 million and $9.3 million and $29.9 million for the three months and nine months ended September 30, 2024 and 2023, respectively.

The estimated aggregate amortization expense related to intangibles, excluding any impairment charges, for each of the five succeeding calendar years ending December 31 is:

Year	Calendar Year Amount		Recorded To Date		Remaining Amount To Record
	(in thousands)
2024	$	37,885	$	28,664	$	9,221
2025	34,768		—		34,768
2026	32,487		—		32,487
2027	28,645		—		28,645
2028	26,340		—		26,340
Thereafter	126,990		—		126,990

34

NOTE 6. OTHER ASSETS

The following is a detail of items that comprised Other assets at the periods indicated:

(in thousands)	September 30, 2024		December 31, 2023
Operating lease ROU assets	$	503,278	$	435,633
Deferred tax assets	331,962		234,309
Accrued interest receivable	879,940		827,704
Derivative assets at fair value	858,344		1,090,194
Other real estate owned and other repossessed assets	293,996		291,280
Equity method investments	337,134		306,313
MSRs	87,192		94,266
Income tax receivables	430,628		478,305
Prepaid expense	170,814		242,273
Capital markets receivables	789,147		144,913
Miscellaneous assets and receivables	686,367		438,694
Total Other assets	$	5,368,802	$	4,583,884

Operating lease ROU assets

We have operating leases for real estate and non-real estate assets. Real estate leases relate to office space and bank/lending retail branches. Non-real estate leases include disaster recovery centers, data centers, ATMs, vehicles and certain equipment leases. Real estate leases may include one or more options to renew, with renewal terms that can extend the lease term generally from one to five years. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

For the three months and nine months ended September 30, 2024, ROU operating lease expenses were $31.8 million and $97.8 million, respectively, compared to $34.5 million and $122.7 million for the corresponding periods in 2023. Sublease income was $1.0 million and $2.8 million, respectively, for the three months and nine months ended September 30, 2024, compared to $1.1 million and $3.0 million for the corresponding periods in 2023. These are reported within Occupancy and equipment expenses in the Company’s Condensed Consolidated Statements of Operations.

Supplemental balance sheet information related to leases was as follows:

Maturity of Lease Liabilities at September 30, 2024	Total Operating leases
	(in thousands)
2024	$	31,921
2025	125,302
2026	111,740
2027	101,135
2028	64,501
Thereafter	211,602
Total lease liabilities	$	646,201
Less: Interest	(80,396)
Present value of lease liabilities	$	565,805

35

NOTE 6. OTHER ASSETS (continued)

Supplemental Balance Sheet Information	September 30, 2024	December 31, 2023
Operating lease ROU assets	$503,278	$435,633
Other liabilities	$565,805	$511,400
Weighted-average remaining lease term (years)	6.8	5.6
Weighted-average discount rate	3.3%	3.1%

	Nine months ended September 30,
Other Information	2024		2023
	(in thousands)
Operating cash flows from operating leases (1)	$	(103,536)	$	(115,681)
Leased assets obtained in exchange for new operating lease liabilities	$	166,654	$	27,958

(1) Activity is included within the net change in other liabilities on the SCF.

The remainder of Other assets is comprised of:

•Deferred tax asset - Refer to Note 15 of these Condensed Consolidated Financial Statements for more information on tax-related activities.

•Accrued interest receivable - Includes accrued interest receivable on the Company's investments, loans, and other interest-earning portfolios.

•Derivative assets at fair value - Refer to the "Offsetting of Financial Assets" table in Note 12 to these Condensed Consolidated Financial Statements for the detail of these amounts.

•Equity method investments - The Company makes certain equity investments in various limited partnerships, some of which are considered VIEs, that invest in and lend to renewable energy projects and qualified community development entities, such as CRA programs. The Company acts only in a limited partner capacity in connection with these partnerships, so the Company has determined that it is not the primary beneficiary of the partnerships because it does not have the power to direct the activities of the partnerships that most significantly impact the partnerships' economic performance.

•MSRs - See further discussion on the valuation of the MSRs in Note 13.

•Income tax receivables - Refer to Note 15 of these Condensed Consolidated Financial Statements for more information on tax-related activities.

•OREO and other repossessed assets includes property and vehicles recovered through foreclosure and repossession.

•Prepaid expenses includes advanced payments for cloud-based hosting, prepaid taxes, and outside services.

•Capital markets receivables includes receivables from broker dealers, financial institutions, clearing organizations, customers and other receivables associated with capital markets activities.

•Miscellaneous assets and receivables includes investment receivables, subvention receivables, derivatives trading receivables, and unapplied payments.

At September 30, 2024, the Company held approximately $31.8 million and $13.1 million of Other assets and Other liabilities, respectively, which were related to a disposal group that was classified as HFS. These assets, included within Other assets in these Condensed Consolidated Financial Statements, primarily included repossessed property with a net book value of approximately $21.8 million, and an ROU lease asset of $9.3 million. These liabilities, included within Other liabilities in these Condensed Consolidated Financial Statements, primarily included a lease liability of $9.2 million and an asset retirement obligation of $3.8 million. In addition to the assets and liabilities of the disposal group classified as HFS, the Company has an investment tax credit of approximately $21.4 million, classified in deferred tax assets that it expects to sell to a third-party separate from the sale of the disposal group.

36

NOTE 7. VIEs

The Company transfers RICs and vehicle leases into newly-formed Trusts that then issue one or more classes of notes payable backed by the collateral. The Company’s continuing involvement with these Trusts is in the form of servicing the assets and, generally, through holding residual interests in the Trusts. The Trusts are considered VIEs under GAAP, and the Company may or may not consolidate these VIEs on its Condensed Consolidated Balance Sheets.

The collateral and borrowings under credit facilities and securitization notes payable of the Company’s consolidated VIEs remain on the Condensed Consolidated Balance Sheets. The Company recognizes finance charges, fee income, and provisions for credit losses on the RICs, and leased vehicles and interest expense on the debt. Revolving credit facilities generally also utilize entities that are considered VIEs which are included on the Condensed Consolidated Balance Sheets.

The Company also uses a titling trust to originate and hold its leased vehicles and the associated leases, for administrative efficiency and also to facilitate the pledging of leases to financing facilities or the sale of leases to other parties, without incurring the costs and administrative burden of retitling the leased vehicles. In this process, the leases may be transferred to separate legal units within the titling trust to segregate them for ownership purposes, including for securitizations. This does not result in any changes to the accounting for the leases. This titling trust is considered a VIE. Refer to Note 4 to these Condensed Consolidated Financial Statements for further information on the Company's leased vehicles.

On-balance sheet VIEs

The assets of consolidated VIEs are presented based upon the legal transfer of the underlying assets in order to reflect legal ownership. Certain of these assets can be used only to settle obligations of the consolidated VIEs and the liabilities of those entities for which creditors (or beneficial interest holders) do not have recourse to the Company's general credit.

The assets and liabilities of consolidated VIEs included the following at the dates indicated:

(in thousands)	September 30, 2024		December 31, 2023
Assets
Restricted cash	$	880,276	$	864,464
LHFS	307,403		—
Net LHFI	24,899,894		25,144,797
Operating lease assets, net (1)	12,516,535		13,782,840
Various other assets	667,170		637,987
Total Assets	$	39,271,278	$	40,430,088
Liabilities
Notes payable	$	27,816,584	$	25,087,655
Various other liabilities	131,317		119,280
Total Liabilities	$	27,947,901	$	25,206,935

(1) As noted above, all leased vehicles are originated through a titling trust. At September 30, 2024 and December 31, 2023, $4.3 billion and $7.8 billion, respectively, of leased vehicle assets included in this amount were in a titling trust, but not in a securitization trust.

The Company retains servicing rights for receivables transferred to the Trusts and receives a monthly servicing fee on the outstanding principal balance. Supplemental fees, such as late charges, for servicing the receivables are reflected in Miscellaneous income, net.

As of September 30, 2024 and December 31, 2023, the Company was servicing $29.2 billion and $28.7 billion, respectively, of gross RICs that have been transferred to consolidated Trusts. Certain amounts shown above are greater than the amounts shown in the corresponding line items in the accompanying Condensed Consolidated Balance Sheets due to intercompany eliminations between the VIEs and other entities consolidated by the Company. For example, for most of its securitizations, the Company retains one or more of the lowest tranches of bonds. Rather than showing investment in bonds as an asset and the associated debt as a liability, these amounts are eliminated in consolidation as required by GAAP.

37

NOTE 7. VIEs (continued)

A summary of the cash flows received from the consolidated Trusts for the respective periods is as follows for the periods indicated:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Assets securitized	$	5,509,331	$	3,055,760	$	16,512,805	$	8,967,889
Net proceeds from new securitizations (1)	$	4,304,041	$	2,093,050	$	12,924,231	$	5,813,928
Net proceeds on retained bonds from new securitizations	503,320		339,690		1,737,210		935,479
Cash received for servicing fees (2)	218,467		231,757		664,355		701,264
Net distributions from Trusts (2)	1,181,158		734,192		3,513,978		2,156,206
Total cash received from Trusts	$	6,206,986	$	3,398,689	$	18,839,774	$	9,606,877

(1) Includes additional advances on existing securitizations.

(2) These amounts are not reflected in the SCF because the cash flows are between the VIEs and other entities included in the consolidation.

Off-balance sheet VIEs

At September 30, 2024 and December 31, 2023, the Company was servicing gross RICs of $1.9 billion and $973.9 million, respectively, that have been sold in off-balance sheet securitizations and were subject to an optional clean-up call.

In August 2024, the Company sold all of the equity certificates of an on-balance sheet auto RIC Trust to a new off-balance sheet Trust established in 2024. This new off-balance sheet Trust issued debt and equity tranches to third-party investors, with the exception of a 5% share of each new tranche purchased by the Company. In addition, the Company sold all of its debt that had been held from the on-balance sheet Trust to a third party. The Company’s sale of this debt and equity from the on-balance sheet Trust resulted in the Company no longer being identified as the primary beneficiary and the subsequent de-recognition of the assets and liabilities of the on-balance sheet Trust from its Condensed Consolidated Balance Sheets. As a result of these transactions, the Company de-consolidated approximately $507.7 million of auto RICs previously HFI which it transferred to an off-balance sheet securitization, resulting in a release of the ACL in the amount of approximately $71.0 million, offset by a loss on securitization of approximately $24.1 million.

In October 2024, the Company transferred an additional $307.4 million of auto RICs from LHFI to LHFS in connection with a planned de-consolidation and transfer to an off-balance sheet Trust, resulting in a release of the ACL in the amount of approximately $33.8 million, offset by a mark to fair value loss on securitization of approximately $8.0 million.

During the three months and nine months ended September 30, 2023, the Company sold no gross RICs to third-party investors in off-balance sheet securitizations and recorded no gain or loss on securitization. Gains and losses on securitizations are recorded in Miscellaneous income, net, in the accompanying Condensed Consolidated Statements of Operations.

A summary of cash flows received from Trusts for the respective periods were as follows for the periods indicated:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Receivables securitized (1)(2)	—		—		1,060,931		—
Net proceeds from new securitizations	—		—		1,003,695		—
Cash received for servicing fees	$	4,319	$	2,109	$	8,455	$	6,666
Total cash received from Trusts	$	4,319	$	2,109	$	1,012,150	$	6,666
(1) Represents the UPB at the time of original securitization. (2) Table excludes impacts of non-cash deconsolidation transaction referred to above.

38

NOTE 7. VIEs (continued)

Other than repurchases of sold assets due to claims against standard representations and warranties, the Company's exposure to loss as a result of its involvement with these VIEs includes the portion of securitizations retained by the Company. The carrying value of this exposure at September 30, 2024 was $68.1 million and $12.8 million of debt and equity investments, respectively, compared to $29.7 million and $2.8 million at December 31, 2023. These amounts are reported in debt securities HTM and other investments, respectively, in Note 2 to these Condensed Consolidated Financial Statements.

As discussed in Note 1 to these Condensed Consolidated Financial Statements, in December 2023 SBNA acquired a 20 percent interest in the Structured LLC for approximately $1.1 billion. The Company did not transfer any assets to the VIE and does not control nor consolidate it. SBNA's 20 percent interest is reported as an AFS debt security that has a fair value of approximately $1.2 billion and $1.1 billion at September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, SBNA serviced approximately $8.7 billion in multi-family loans for the Structured LLC and received a market rate servicing fee. For the three months and nine months ended September 30, 2024, SBNA recognized $14.1 million and $38.1 million, respectively, in servicing fee income from the servicing of these assets which is recorded in Miscellaneous income, net, in the accompanying Condensed Consolidated Statements of Operations.

NOTE 8. DEPOSITS AND OTHER CUSTOMER ACCOUNTS

Deposits and other customer accounts are summarized as follows at the dates indicated:

	September 30, 2024				December 31, 2023
(dollars in thousands)	Balance		Percent of total deposits		Balance		Percent of total deposits
Interest-bearing demand deposits	$	11,614,676	15.0	%	$	11,591,982	15.0	%
Non-interest-bearing demand deposits	14,618,933		18.9	%	15,504,947		20.1	%
Savings	3,800,896		4.9	%	4,428,281		5.7	%
Customer repurchase accounts	209,063		0.3	%	238,523		0.3	%
Money market	25,882,561		33.3	%	25,361,575		33.0	%
CDs	21,418,338		27.6	%	19,947,868		25.9	%
Total deposits (1)	$	77,544,467	100.0	%	$	77,073,176	100.0	%

(1) Includes foreign deposits, as defined by the FRB, of $5.2 billion and $5.4 billion at September 30, 2024 and December 31, 2023, respectively.

Demand deposit overdrafts that have been reclassified as loan balances were $157.2 million and $107.6 million at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024 and December 31, 2023, the Company had $6.5 billion and $5.6 billion, respectively, of CDs greater than $250 thousand.

The Company's subsidiaries had outstanding irrevocable letters of credit totaling $50.0 million and $40.0 million from the FHLB of Pittsburgh at September 30, 2024 and December 31, 2023, respectively, used to secure uninsured deposits placed with the Bank by state and local governments and their political subdivisions.

39

NOTE 9. BORROWINGS

Total borrowings and other debt obligations at September 30, 2024 were $44.4 billion, compared to $44.1 billion at December 31, 2023. The Company's debt agreements impose certain limitations on dividend payments and other transactions. The Company is currently in compliance with these limitations.

During the nine months ended September 30, 2024, the Company issued the following debt:

•$1.0 billion in aggregate principal amount of its 6.17% fixed-to-floating rate senior notes due January 2030.

•$500.0 million in aggregate principal amount of its 6.12% fixed-to-floating rate senior notes due May 2027.

•$750.0 million in aggregate principal amount of its 6.34% fixed-to-floating rate senior notes due May 2035.

•$1.0 billion in aggregate principal amount of its 5.35% fixed-to-floating rate senior notes due September 2030

•$235.9 million of credit-linked notes due June 2032.

•$4.6 billion in on-balance sheet securitization transactions on its SBALT platform, of which approximately $596.8 million was retained in interests in the VIE.

•$6.7 billion in on-balance sheet securitization transactions on its SDART platform, of which it retained approximately $766.8 million in interests in the VIE.

•$2.8 billion in on-balance sheet securitization transactions on its DRIVE platform, of which it retained approximately $373.6 million in interests in the VIE.

The Company continues to consolidate these VIEs on its Condensed Consolidated Balance Sheets.

In October 2024, the Company's auto business completed an on-balance sheet securitization transaction of $1.7 billion on its SDART platform, of which it retained approximately $199.9 million in interests in the VIE.

40

NOTE 9. BORROWINGS (continued)

Parent Company and other Subsidiary Borrowings and Debt Obligations

The following table presents information regarding the Parent Company and its subsidiaries' borrowings and other debt obligations at the dates indicated:

	September 30, 2024				December 31, 2023
(dollars in thousands)	Balance		Effective Rate		Balance		Effective Rate
Parent Company
3.50% senior notes due June 2024	$	—	—	%	$	999,559	3.50	%
3.45% senior notes due June 2025	999,253		3.45	%	998,329		3.45	%
4.26% senior notes due June 2025	—		—	%	499,634		4.43	%
4.50% senior notes due July 2025	1,099,444		4.50	%	1,098,937		4.50	%
Senior notes due April 2026 (2)	433,491		5.97	%	433,450		6.02	%
5.81% senior sustainability notes due September 2026	499,478		5.92	%	499,082		5.92	%
3.24% senior notes due October 2026	935,486		3.24	%	930,768		3.24	%
6.12% senior notes, due May 2027	499,091		6.20	%	—		—	%
6.89% senior notes due June 2027 (1)	750,000		6.89	%	750,000		6.89	%
4.40% senior notes due July 2027	1,049,673		4.40	%	1,049,641		4.40	%
2.49% senior notes due January 2028	998,167		2.57	%	997,582		2.57	%
6.50% senior notes due March 2029	997,125		6.59	%	996,580		6.59	%
6.57% senior notes due June 2029	498,326		6.67	%	498,034		6.67	%
6.17% senior notes due January 2030	996,601		6.26	%	—		—	%
5.35% senior notes due September 2030	996,235		5.44	%	—		—	%
7.66% senior notes due November 2031	497,954		7.73	%	497,797		7.73	%
2.88% subordinated notes, due November 2031 (1)	500,000		2.88	%	500,000		2.88	%
7.18% subordinated notes due December 2032 (1)	500,000		7.18	%	500,000		7.18	%
6.34% senior notes due May 2035	746,438		6.40	%	—		—	%
Total Parent Company borrowings	12,996,762				11,249,393
Subsidiaries
Short-term borrowing due within one year, maturing through March 2024	$	—	—	%	$	427,531	4.66	%
Short-term borrowing due within one year, maturing through June 2025	862,887		2.71	%	—		—	%
FHLB advances, maturing through April 2027	2,233,823		4.53	%	6,584,791		5.04	%
Credit-linked notes due December 2031 (3)	45,600		4.89	%	89,812		3.51	%
Credit-linked notes due May 2032 (4)	121,150		8.56	%	214,941		7.25	%
Credit-linked notes due June 2032 (12)	233,018		7.88	%	—		—	%
Credit-linked notes due August 2032 (5)	109,164		11.12	%	188,282		9.12	%
Credit-linked notes due December 2032 (6)	164,088		11.51	%	246,497		10.16	%
Credit-linked notes due June 2033 (7)	63,889		11.49	%	89,787		10.26	%
Credit Linked notes due December 2033 (8)	195,975		9.28	%	206,033		9.24	%
Credit-linked notes due February 2052 (9) (11)	110,039		11.94	%	118,246		11.92	%
6.98% senior notes due October 2025 (1)	2,000,000		6.98	%	2,000,000		6.98	%
Warehouse lines maturing through April 2026 (10)	2,717,478		6.30	%	3,618,378		6.93	%
Secured structured financings maturing through May 2032	22,579,568		0.48% - 7.69%		19,110,360		0.48% - 7.69%
Total subsidiary borrowings and other debt obligations	31,436,679				32,894,658
Total Parent Company and subsidiaries' borrowings and other debt obligations	$	44,433,441			$	44,144,051

(1) These notes are payable to SHUSA's parent company, Santander.

(2) These notes bear interest at a rate equal to the SOFR index rate plus 135 basis points per year.

(3) Notes are tied to the performance of a $2.0 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $36.0 million.

(4) Notes are tied to the performance of a $3.5 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $63.0 million.

(5) Notes are tied to the performance of a $3.5 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $63.0 million.

(6) Notes are tied to the performance of a $3.6 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $65.3 million.

(7) Notes are tied to the performance of a $1.1 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $22.0 million.

(8) Notes are tied to the performance of a $2.1 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $62.3 million.

(9) Notes are tied to the performance of a $2.5 billion original reference pool of SBNA residential mortgage loans. The contractual residual amount is $5.1 million.

(10) Benchmark rates used included commercial paper, daily simple SOFR, one-month term SOFR, and three-month term SOFR.

(11) Variable rate notes issued in tranches that bear interest at a rate equal to SOFR index plus varying spreads ranging from 4.15% to 13.90% and reset monthly.

(12) Issued in June 2024 in the amount of $235.9 million. Notes are tied to the performance of a $2.3 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $75.2 million.

41

NOTE 9. BORROWINGS (continued)

Credit-Linked Notes

Credit-linked notes transfer credit risk on a reference pool of loans to the purchaser of the notes. In the event of credit losses on the reference pool in excess of the contractual residual amount, the principal balance of the notes will be reduced to the extent of such loss up to the amount of notes issued and recognized as a debt extinguishment gain within Miscellaneous income, net. The Company has the option to redeem the notes once the UPB of the reference pool is less than or equal to 10% of the initial principal balance.

In connection with certain of its credit linked notes, the Company is required to maintain a letter of credit, as well as a collateral account with a third-party financial institution, with the amount equal to at least the outstanding balances of the transaction’s credit-linked notes. This is reported as restricted cash in these Condensed Consolidated Financial Statements.

Warehouse Lines

The following tables present information regarding the Company's warehouse lines at the dates indicated:

	September 30, 2024
(dollars in thousands)	Balance		Committed Amount		Effective Rate		Assets Pledged		Restricted Cash Pledged
Warehouse line due July 2025	$	122,600	$	500,000	7.73	%	$	203,708	$	—
Warehouse line due October 2025	1,100,000		2,100,000		5.74	%	1,552,740		64
Warehouse line due November 2025	163,400		500,000		6.65	%	235,075		—
Warehouse line due November 2025	—		500,000		—	%	—		401
Warehouse line due January 2026	155,100		1,000,000		7.70	%	504,459		2,661
Warehouse line due February 2026	412,978		700,000		6.67	%	669,878		2,299
Warehouse line due April 2026	315,200		1,000,000		9.66	%	484,983		1
Warehouse line due April 2026	448,200		1,000,000		3.95	%	621,545		572
Total credit facilities	$	2,717,478	$	7,300,000	6.30	%	$	4,272,388	$	5,998

The warehouse lines and repurchase facilities are fully collateralized by a designated portion of the Company's RICs, leased vehicles, securitization notes payable, and residuals retained by the Company.

Secured Structured Financings

The following tables present information regarding the Company's secured structured financings at the dates indicated:

	September 30, 2024
(dollars in thousands)	Balance		Initial Note Amounts Issued (3)		Initial Weighted Average Interest Rate Range	Collateral (2)		Restricted Cash
Public securitizations maturing on various dates through May 2032(1)	$	20,382,979	$	54,135,715	0.48% - 7.69%	$	29,804,750	$	873,489
Privately issued amortizing notes maturing on various dates through August 2030 (3)	2,196,589		6,700,025		3.13% - 6.73%	3,585,239		755
Total secured structured financings	$	22,579,568	$	60,835,740	0.48% - 7.69%	$	33,389,989	$	874,244

(1) Securitizations executed under Rule 144A of the Securities Act are included within this balance.

(2) Secured structured financings may be collateralized by collateral overages of other issuances.

(3) Excludes securitizations which no longer have outstanding debt and excludes any incremental borrowings.

Most of the Company's secured structured financings are in the form of public, SEC-registered securitizations. The Company also executes private securitizations under Rule 144A of the Securities Act, and periodically issues private term amortizing notes, which are structured similarly to securitizations but are acquired by banks and conduits. The Company's securitizations and private issuances are collateralized by vehicle RICs and loans or leases.

42

NOTE 10. ACCUMULATED OTHER COMPREHENSIVE INCOME / (LOSS)

The following table presents the components of AOCI / (loss), net of related tax, for the periods indicated.

		Total Other Comprehensive Income/(Loss)									Total Accumulated Other Comprehensive Income/(Loss)
		Three months ended September 30, 2024									June 30, 2024						September 30, 2024
(in thousands)	Pretax Activity			Tax Effect			Net Activity			Beginning Balance			Net Activity			Ending Balance
Change in AOCI on cash flow hedge derivative financial instruments		$	106,354		$	(29,599)		$	76,755
Reclassification adjustment for net (gains)/losses on cash flow hedge derivative financial instruments(1)		(7,605)			1,972			(5,633)
Net unrealized gains/(losses) on cash flow hedge derivative financial instruments		98,749			(27,627)			71,122			$	(151,447)		$	71,122		$	(80,325)
Change in unrealized (losses) on investments in debt securities AFS		194,778			(46,653)			148,125
Reclassification adjustment for (gains)/losses included in net income/(expense) on debt securities AFS (2)		(444)			115			(329)
Net unrealized (losses) / gains on investments in debt securities AFS		194,334			(46,538)			147,796			(739,684)			147,796			(591,888)
Pension and post-retirement actuarial (loss)/gain(3)		606			(157)			449			(19,842)			449			(19,393)
As of September 30, 2024		$	293,689		$	(74,322)		$	219,367		$	(910,973)		$	219,367		$	(691,606)
(1) Net gains/(losses) reclassified into Interest on borrowings and other debt obligations in the Condensed Consolidated Statements of Operations for settlements of interest rate swap contracts designated as cash flow hedges. (2) Net (gains)/losses reclassified into Net gain on sale of investment securities sales in the Condensed Consolidated Statements of Operations for the sale of debt securities. (3) Included in the computation of net periodic pension costs.

	Total Other Comprehensive Income/(Loss)						Total Accumulated Other Comprehensive Income/(Loss)
	Three months ended September 30, 2023						June 30, 2023				September 30, 2023
(in thousands)	Pretax Activity		Tax Effect		Net Activity		Beginning Balance		Net Activity		Ending Balance
Change in AOCI on cash flow hedge derivative financial instruments	$	63,730	$	(13,491)	$	50,239
Reclassification adjustment for net (gains)/losses on cash flow hedge derivative financial instruments(1)	3,640		(944)		2,696
Net unrealized gains/(losses) on cash flow hedge derivative financial instruments	67,370		(14,435)		52,935		$	(393,495)	$	52,935	$	(340,560)
Change in unrealized gains/(losses) on investment securities	(88,733)		21,656		(67,077)
Reclassification adjustment for net (gains)/losses included in net income/(expense) on debt securities AFS(2)	37,049		(9,612)		27,437
Net unrealized (losses) on investment securities AFS	(51,684)		12,044		(39,640)		(806,404)		(39,640)		(846,044)
Pension and post-retirement actuarial gain(3)	683		(177)		506		(22,796)		506		(22,290)
As of September 30, 2023	$	16,369	$	(2,568)	$	13,801	$	(1,222,695)	$	13,801	$	(1,208,894)
(1) Net gains/(losses) reclassified into Interest on borrowings and other debt obligations in the Condensed Consolidated Statements of Operations for settlements of interest rate swap contracts designated as cash flow hedges. (2) Net (gains)/losses reclassified into Net gain on sale of investment securities sales in the Condensed Consolidated Statements of Operations for the sale of debt securities. (3) Included in the computation of net periodic pension costs.

43

NOTE 10. ACCUMULATED OTHER COMPREHENSIVE INCOME / (LOSS) (continued)

		Total Other Comprehensive Income/(Loss)									Total Accumulated Other Comprehensive Income/(Loss)
		Nine months ended September 30, 2024									December 31, 2023						September 30, 2024
(in thousands)	Pre-tax Activity			Tax Effect			Net Activity			Beginning Balance			Net Activity			Ending Balance
Change in AOCI on cash flow hedge derivative financial instruments		$	242,560		$	(62,733)		$	179,827
Reclassification adjustment for net losses/(gains) on cash flow hedge derivative financial instruments (1)		(7,605)			1,972			(5,633)
Net unrealized (losses)/gains on cash flow hedge derivative financial instruments		234,955			(60,761)			174,194			$	(254,519)		$	174,194		$	(80,325)
Change in unrealized (losses)/gains on investments in debt securities		261,990			(62,998)			198,992
Reclassification adjustment for net losses/(gains) included in net income/(expense) on debt securities (2)		(444)			115			(329)
Net unrealized (losses)/gains on investments in debt securities		261,546			(62,883)			198,663			(790,551)			198,663			(591,888)
Pension and post-retirement actuarial gain / (loss)(3)		1,457			(352)			1,105			(20,498)			1,105			(19,393)
As of September 30, 2024		$	497,958		$	(123,996)		$	373,962		$	(1,065,568)		$	373,962		$	(691,606)

(1)    Net gains/(losses) reclassified into Interest on borrowings and other debt obligations in the Condensed Consolidated Statements of Operations for settlements of interest rate swap contracts designated as cash flow hedges.

(2)    Net (gains)/losses reclassified into Net gain on sale of investment securities sales in the Condensed Consolidated Statements of Operations for the sale of debt securities.

(3)    Included in the computation of net periodic pension costs.

	Total Other Comprehensive Income/(Loss)						Total Accumulated Other Comprehensive Income/(Loss)
	Nine months ended September 30, 2023						December 31, 2022				September 30, 2023
(in thousands)	Pre-tax Activity		Tax Effect		Net Activity		Beginning Balance		Net Activity		Ending Balance
Change in AOCI on cash flow hedge derivative financial instruments	$	224,400	$	(57,629)	$	166,771
Reclassification adjustment for net (gains)/losses on cash flow hedge derivative financial instruments (1)	11,252		(2,919)		8,333
Net unrealized gains/(losses) on cash flow hedge derivative financial instruments	235,652		(60,548)		175,104		$	(515,664)	$	175,104	$	(340,560)
Change in unrealized (losses)/gains on investments in debt securities	(151,605)		21,742		(129,863)
Reclassification adjustment for net (gains)/losses included in net income/(expense) on debt securities AFS (2)	108,556		(28,165)		80,391
Net unrealized gains/(losses) on investments in debt securities	(43,049)		(6,423)		(49,472)		(796,572)		(49,472)		(846,044)
Pension and post-retirement actuarial gain / (loss) (3)	2,022		(525)		1,497		(23,787)		1,497		(22,290)
As of September 30, 2023	$	194,625	$	(67,496)	$	127,129	$	(1,336,023)	$	127,129	$	(1,208,894)

(1)    Net gains/(losses) reclassified into Interest on borrowings and other debt obligations in the Condensed Consolidated Statements of Operations for settlements of interest rate swap contracts designated as cash flow hedges.

(2)    Net (gains)/losses reclassified into Net gain on sale of investment securities sales in the Condensed Consolidated Statements of Operations for the sale of debt securities.

(3)    Included in the computation of net periodic pension costs.

44

NOTE 11. SECURITIES FINANCING ACTIVITIES

The Company may enter into Securities Financing Activities primarily to deploy the Company’s excess cash and investment positions. Securities Financing Activities are treated as collateralized financings and are included in "Federal funds sold and securities purchased under resale agreements or similar arrangements" and "Federal funds purchased and securities loaned or sold under repurchase agreements" on the Company’s Condensed Consolidated Balance Sheets. Refer to Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for 2023 for further discussion of accounting for and the offsetting of securities financing assets and liabilities.

The Company has elected the FVO for certain of its Securities Financing Activities. Refer to Note 13 to these Condensed Consolidated Financial Statements for the amounts recorded at FVO.

Securities borrowed and purchased under agreements to resell, at their respective carrying values, consisted of the following at the dates indicated:

(in thousands)	September 30, 2024		December 31, 2023
Securities purchased under agreements to resell	$	7,468,374	$	8,617,309
Securities borrowed	1,169,500		1,621,405
Total	$	8,637,874	$	10,238,714

Securities loaned or sold under agreements to repurchase, at their respective carrying values, consisted of the following at the dates indicated:

(in thousands)	September 30, 2024		December 31, 2023
Securities sold under agreements to repurchase	$	18,101,131	$	16,290,761
Securities lending	2,082		25
Total	$	18,103,213	$	16,290,786

Securities Financing Activities are generally executed under standard industry agreements, including master agreements that create a single contract under which all transactions between two counterparties are executed, allowing for trade aggregation of receivables and payables into a single net payment or settlement. The amounts of securities financing assets or liabilities qualified for offset in the Condensed Consolidated Balance Sheets were as follows for the dates indicated.

	September 30, 2024
(in thousands)	Gross amounts of recognized assets		Gross amounts offset on the Condensed Consolidated Balance Sheets (1)		Net amounts of assets included on the Condensed Consolidated Balance Sheets
Securities purchased under agreements to resell	$	42,342,058	$	(34,873,684)	$	7,468,374
Securities borrowed	1,169,500		—		1,169,500
Total	$	43,511,558	$	(34,873,684)	$	8,637,874
	September 30, 2024
(in thousands)	Gross amounts of recognized liabilities		Gross amounts offset on the Condensed Consolidated Balance Sheets (1)		Net amounts of liabilities included on the Condensed Consolidated Balance Sheets
Securities sold under agreements to repurchase	$	52,974,815	$	(34,873,684)	$	18,101,131
Securities lending	2,082		—		2,082
Total	$	52,976,897	$	(34,873,684)	$	18,103,213
(1) Includes financial instruments subject to enforceable master netting agreements that are permitted to be offset under ASC 210-20-45.

45

NOTE 11. SECURITIES FINANCING ACTIVITIES (continued)

	December 31, 2023
(in thousands)	Gross amounts of recognized assets		Gross amounts offset on the Consolidated Balance Sheets (1)		Net amounts of assets included on the Consolidated Balance Sheets
Securities purchased under agreements to resell	$	41,237,731	$	(32,620,422)	$	8,617,309
Securities borrowed	1,621,405		—		1,621,405
Total	$	42,859,136	$	(32,620,422)	$	10,238,714
	December 31, 2023
(in thousands)	Gross amounts of recognized liabilities		Gross amounts offset on the Consolidated Balance Sheets (1)		Net amounts of liabilities included on the Consolidated Balance Sheets
Securities sold under agreements to repurchase	$	48,911,183	$	(32,620,422)	$	16,290,761
Securities lending	25		—		25
Total	$	48,911,208	$	(32,620,422)	$	16,290,786
(1) Includes financial instruments subject to enforceable master netting agreements that are permitted to be offset under ASC 210-20-45.

The following table presents the gross amounts of liabilities associated with Securities Financing Activities by remaining contractual maturity as of the date indicated:

	September 30, 2024
(in thousands)	Open and overnight		Up to 30 days		31-90 days		Greater than 90 days		Total
Securities sold under agreements to repurchase	$	22,971,932	$	5,794,234	$	10,098,561	$	14,110,088	$	52,974,815
Securities lending	2,082		—		—		—		2,082
Total	$	22,974,014	$	5,794,234	$	10,098,561	$	14,110,088	$	52,976,897

The following table presents the gross amounts of liabilities associated with Securities Financing Activities by class of underlying collateral as of the dates indicated:

	September 30, 2024						December 31, 2023
(in thousands)	Repurchase agreements		Securities lending		Total		Repurchase agreements		Securities lending		Total
U.S. Treasury	$	31,301,786	$	—	$	31,301,786	$	29,251,978	$	—	$	29,251,978
Residential agency MBS	19,583,619		—		19,583,619		17,532,972		—		17,532,972
Corporate and other securities	2,089,410		2,082		2,091,492		2,126,233		25		2,126,258
Total	$	52,974,815	$	2,082	$	52,976,897	$	48,911,183	$	25	$	48,911,208

46

NOTE 12. DERIVATIVES

General

Derivatives represent contracts between parties that usually require little or no initial net investment and result in one or both parties delivering cash or another type of asset to the other party based on a notional amount and an underlying asset, index, interest rate or future purchase commitment or option as specified in the contract. Derivative transactions are often measured in terms of notional amount, but this amount is generally not exchanged, is not recorded on the balance sheet, and does not represent the Company`s exposure to credit loss. The notional amount is the basis on which the financial obligation of each party to the derivative contract is calculated to determine required payments under the contract. The Company controls the credit risk of its derivative contracts through credit approvals, limits and monitoring procedures. The underlying variable is typically a referenced interest rate (commonly the OIS rate or a SOFR-based rate), security, credit spread or index.

The Company’s capital markets and mortgage banking activities are subject to price risk. The Company employs various tools to measure and manage price risk in its portfolios. In addition, the Board of Directors has established certain limits relative to positions and activities. The level of price risk exposure at any given time depends on the market environment and expectations of future price and market movements and will vary from period to period.

See Note 13 to these Condensed Consolidated Financial Statements for discussion of the valuation methodology for derivative instruments.

Credit Risk Contingent Features

The Company has entered into certain derivative contracts that require the posting of collateral to counterparties when those contracts are in a net liability position. The amount of collateral to be posted is based on the amount of the net liability and thresholds generally related to the Company's long-term senior unsecured credit ratings. In a limited number of instances, counterparties also have the right to terminate their ISDA Master Agreements if the Company's ratings fall below a specified level, typically investment grade. As of September 30, 2024, derivatives in this category had a fair value of $6.0 thousand. The credit ratings of the Company and SBNA are currently considered investment grade. As of September 30, 2024, no additional collateral would be required if there were a further 1- or 2- notch downgrade by either S&P or Moody's.

As of September 30, 2024 and December 31, 2023, the aggregate fair value of all derivative contracts with credit risk contingent features (i.e., those containing collateral posting or termination provisions based on the Company's ratings) that were in a net liability position totaled $8.3 million and $11.1 million, respectively. The Company had $14.8 million and $15.3 million in cash and securities collateral posted to cover those positions as of September 30, 2024 and December 31, 2023, respectively.

Hedge Accounting

Management uses derivative instruments designated as hedges to mitigate the impact of interest rate and foreign exchange rate movements on the fair value of certain assets and liabilities and on highly probable forecasted cash flows. These instruments primarily include interest rate swaps that have underlying interest rates based on key benchmark indices. The nature and volume of the derivative instruments used to manage interest rate risk depend on the level and type of assets and liabilities on the balance sheet and the risk management strategies for the current and anticipated interest rate environment.

Interest rate swaps are generally used to convert fixed-rate assets and liabilities to variable rate assets and liabilities and vice versa. The Company utilizes interest rate swaps that have a high degree of correlation to the related financial instrument.

Fair Value Hedges

The Company enters into derivatives to hedge the risk of changes in fair value of a portion of its AFS debt securities portfolio. These derivatives are designated as fair value hedges at inception. The gains/(losses) from changes in the fair value of the hedging derivative and the offsetting gains/(losses) from changes in the fair value of the related underlying hedged items due to the hedged risk are reporting in the same line item in the Condensed Consolidated Statements of Operations as earnings from the hedged items. The cumulative fair value hedge basis adjustments included in the carrying amount of hedged assets is reversed through earnings in future periods as an adjustment to yield. The Company includes gains/(losses) on the hedging derivatives and the related hedged items in the assessment of hedge effectiveness. All of these swaps have been deemed highly effective fair value hedges. The last of the hedges is scheduled to expire in February 2030. The Company has entered into fair value hedges of portions of a closed portfolio of approximately $2.7 billion of AFS debt securities, using the portfolio layer method.

47

NOTE 12. DERIVATIVES (continued)

The carrying amount and fair value hedge adjustment of hedged assets at the dates indicated was:

	Carrying Amount of Hedged Assets				Amount of Fair Value Hedge Adjustment Included in the Carrying Amount
	September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023
Debt securities AFS (Note 2)	$	1,825,722	$	2,463,991	$	24,278	$	36,009

Cash Flow Hedges

The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s floating-rate assets and liabilities and forecasted issuances of borrowed funds. The Company also has foreign exchange contracts designed to hedge certain contractual payments in foreign currencies.

Except as noted below all of these derivatives have been deemed highly effective cash flow hedges. The gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same Condensed Consolidated Statements of Operations line item as the earnings effect of the hedged item.

During the third quarter of 2024, the Company discontinued cash flow hedges with an aggregate notional amount of $500.0 million that were no longer highly effective and it is probable that the forecasted transaction will not occur. The Company de-designated the hedge relationship, resulting in the reclassification of $4.6 million from AOCI to non-interest income.

The last of the hedges is scheduled to expire in December 2028. The Company includes all components of each derivative's gain or loss in the assessment of hedge effectiveness. As of September 30, 2024, the Company estimated that approximately $19.3 million of unrealized losses included in AOCI would be reclassified to earnings during the subsequent twelve months as the future cash flows occur.

Derivatives Designated in Hedge Relationships – Notional and Fair Values

Derivatives designated as accounting hedges included the following as of the dates indicated:

(dollars in thousands)	Notional Amount		Asset		Liability		Weighted Average Receive Rate		Weighted Average Pay Rate		Weighted Average Life (Years)
September 30, 2024
Fair value hedges:
Cross-currency swaps	$	18,766	$	191	$	653	5.35	%	9.90	%	3.08
Interest rate swaps	5,850,000		16,453		9,586		1.68	%	3.5	%	2.41
Cash flow hedges:
Pay fixed - receive variable interest rate swaps	$	4,964,900	$	1,896	$	6,239	2.48	%	3.56	%	2.32
Pay variable - receive fixed interest rate swaps	12,000,000		56,806		161,619		2.76	%	2.23	%	1.27
Total	$	22,833,666	$	75,346	$	178,097	2.42	%	2.85	%	1.80
December 31, 2023
Fair value hedges:
Cross-currency swaps	$	18,766	$	192	$	2,235	5.91	%	9.90	%	3.83
Interest rate swaps	6,650,000		38,712		7,716		2.02	%	3.46	%	3.01
Cash flow hedges:
Pay fixed — receive variable interest rate swaps	$	3,422,700	$	22,935	$	120	5.38	%	3.82	%	2.53
Pay variable - receive fixed interest rate swaps	11,925,000		13,575		362,018		1.83	%	1.64	%	1.30
Interest rate floor	250,000		—		—		—	%	—	%	0.04
Total	$	22,266,466	$	75,414	$	372,089	2.41	%	2.51	%	1.99

48

NOTE 12. DERIVATIVES (continued)

Other Derivative Activities

The Company also enters into derivatives that are not designated as accounting hedges under GAAP. Although these derivatives are used to hedge risk and are considered economic hedges, they are not designated as accounting hedges because the contracts they are hedging are often carried at fair value on the balance sheet, resulting in generally symmetrical accounting treatment for the hedging instrument and the hedged item.

Customer-related derivatives

The Company offers derivatives to its customers in connection with their risk management requirements related to foreign exchange and lending arrangements. These derivatives primarily consist of interest rate swaps, caps, floors, and foreign exchange contracts. Risk exposure from customer positions is managed through offsetting transactions with other dealers, including Santander. Refer to Note 17 for related party transactions.

Broker dealer activities

The Company uses exchange-traded options and futures, credit default swaps, and forward-settling securities trades as part of its trading business, as well as to actively manage risk exposures that arise from its trading in cash instruments.

Structured financing activities

In certain circumstances, the Company is required to hedge its interest rate risk on revolving credit and term borrowings related to its secured structured financings. The Company uses interest rate caps to satisfy these requirements and enters into offsetting option contracts.

Foreign exchange activities

The Company uses foreign exchange contracts to manage the foreign exchange risk associated with certain foreign currency-denominated assets and liabilities. Foreign exchange contracts, which include spot and forward contracts as well as cross-currency swaps, represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date and may or may not be physically settled depending on the Company’s needs. Exposure to gains and losses on these contracts increase or decrease over their respective lives as currency exchange and interest rates fluctuate.

Mortgage Banking Derivatives

The Company typically retains the servicing rights related to residential mortgage loans that are sold. Most of the Company`s residential MSRs are accounted for at fair value. As deemed appropriate, the Company economically hedges MSRs using interest rate swaps and forward contracts to purchase MBS.

Other derivative activities

Other derivative instruments primarily include forward contracts related to certain investment securities sales, loan sales, an OIS, and a total return swap on Visa, Inc. Class B common shares.

49

NOTE 12. DERIVATIVES (continued)

Derivatives Not Designated in Hedge Relationships – Notional and Fair Values

Other derivative activities included the following as of the dates indicated:

	Notional				Asset derivatives Fair value				Liability derivatives Fair value
(in thousands)	September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023
Mortgage banking derivatives:
Total mortgage banking risk management	$	601,000	$	662,000	$	7,391	$	14,634	$	19,788	$	31,304
Customer-related derivatives:
Swaps receive fixed	16,171,182		15,017,998		83,452		26,731		459,879		687,505
Swaps pay fixed	16,322,875		15,005,503		479,903		708,642		85,771		26,366
Other	9,411,237		8,691,978		80,546		93,439		79,080		91,602
Total customer-related derivatives	41,905,294		38,715,479		643,901		828,812		624,730		805,473
Other derivative activities:
Foreign exchange contracts	11,354,128		11,518,594		67,767		54,722		67,908		62,842
Interest rate swap agreements	500,100		2,400,100		1,280		—		—		2
Interest rate cap agreements	1,432,200		2,313,672		24,070		76,019		—		—
Options for interest rate cap agreements	1,432,200		2,313,672		—		—		24,070		76,019
Other	91,057,063		48,543,537		98,877		42,657		73,766		126,968
Total	$	148,281,985	$	106,467,054	$	843,286	$	1,016,844	$	810,262	$	1,102,608

50

NOTE 12. DERIVATIVES (continued)

Gains (Losses) on all Derivatives

The following Condensed Consolidated Statements of Operations line items were impacted by the Company’s derivative activities for the periods indicated:

(in thousands)		Three months ended September 30,				Nine months ended September 30,
	Line Item	2024		2023		2024		2023
Fair value hedges:
Cross-currency swaps	Net interest income	$	(528)	$	727	$	(526)	$	(577)
Interest rate swaps	Net interest income	9,872		8,249		34,158		21,411
Derivative Activity (1)
Cash flow hedges:
Pay fixed-receive variable interest rate swaps	Interest expense on borrowings	15,823		8,764		42,435		7,696
Pay variable receive-fixed interest rate swap	Interest income on loans	(72,727)		(116,685)		(248,896)		(336,023)
Interest rate floors	Interest income on loans	—		(351)		(46)		(436)
Other derivative activities:
Mortgage banking derivatives	Non Interest income	5,362		(5,904)		(492)		(8,415)
Customer-related derivatives	Non interest income	(30,740)		(6,788)		(20,810)		(6,719)
Foreign exchange	Non interest income	31,971		17,214		47,212		30,648
Interest rate swaps, caps, and options	Non interest income	(1,340)		(2,809)		24,068		(5,909)
	Net interest income	(721)		—		(3,031)		—
Other	Non interest income	(39,787)		231,411		(6,706)		201,280

(1)    Gains are disclosed as positive numbers while losses are shown as a negative number regardless of the line item being affected.

The net amount of change recognized in OCI for cash flow hedge derivatives were gains of $76.8 million and $179.8 million, and $50.2 million and $166.8 million, net of tax, for the three months and nine months ended September 30, 2024, and 2023, respectively.

The net amount of changes reclassified from OCI into earnings for cash flow hedge derivatives were gains of $5.6 million and $5.6 million, and losses $2.7 million and $8.3 million, net of tax, for the three months and nine months ended September 30, 2024, and 2023, respectively.

Disclosures about Offsetting Assets and Liabilities

The Company enters into legally enforceable master netting agreements which reduce risk by permitting netting of transactions with the same counterparty on the occurrence of certain events. A master netting agreement allows two counterparties the ability to net-settle amounts under all contracts, including any related collateral posted, through a single payment and in a single currency. The right to offset and certain terms regarding the collateral process, such as valuation, credit events and settlement, are contained in the applicable master agreement. The Company's financial instruments, including resell and repurchase agreements, securities lending arrangements, derivatives, and cash collateral, may be eligible for offset on its Condensed Consolidated Balance Sheets.

The Company has elected to present derivative balances on a gross basis even if the derivative is subject to a legally enforceable nettable ISDA Master Agreement for all trades executed after April 1, 2013. Collateral that is received or pledged for these transactions is disclosed within the “Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets” section of the tables below.

51

NOTE 12. DERIVATIVES (continued)

Information about financial assets and liabilities that are eligible for offset on the Condensed Consolidated Balance Sheets was as follows for the dates indicated:

	Offsetting of Financial Assets
							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(in thousands)	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts of Assets Presented in the Condensed Consolidated Balance Sheets		Collateral Received (2)		Net Amount
September 30, 2024
Fair value hedges	$	16,644	$	—	$	16,644	$	(6,126)	$	10,518
Cash flow hedges	58,702		—		58,702		(25,972)		32,730
Other derivative activities (1)	843,286		(60,288)		782,998		(87,175)		695,823
Total Derivative Assets	$	918,632	$	(60,288)	$	858,344	$	(119,273)	$	739,071
December 31, 2023
Fair value hedges	$	38,904	$	—	$	38,904	$	(11,300)	$	27,604
Cash flow hedges	36,510		—		36,510		(22,935)		13,575
Other derivative activities (1)	1,016,844		(2,064)		1,014,780		(170,835)		843,945
Total Derivative Assets	$	1,092,258	$	(2,064)	$	1,090,194	$	(205,070)	$	885,124

(1)Includes customer-related and other derivatives.

(2)Collateral received includes cash, cash equivalents, and other financial instruments. Cash collateral received is reported in Other liabilities, as applicable, in the Condensed Consolidated Balance Sheets. Financial instruments that are pledged to the Company are not reflected in the accompanying Condensed Consolidated Balance Sheets since the Company does not control or have the ability to re-hypothecate these instruments.

	Offsetting of Financial Liabilities
							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(in thousands)	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets		Collateral Pledged (2)		Net Amount
September 30, 2024
Fair value hedges	$	10,239	$	—	$	10,239	$	—	$	10,239
Cash flow hedges	167,858		—		167,858		(85,508)		82,350
Other derivative activities (1)	810,262		(60,238)		750,024		(65,420)		684,604
Total Derivative Liabilities	$	988,359	$	(60,238)	$	928,121	$	(150,928)	$	777,193
December 31, 2023
Fair value hedges	$	9,951	$	—	$	9,951	$	(1,064)	$	8,887
Cash flow hedges	362,138		—		362,138		(140,968)		221,170
Other derivative activities (1)	1,102,608		(2,014)		1,100,594		(129,722)		970,872
Total Derivative Liabilities	$	1,474,697	$	(2,014)	$	1,472,683	$	(271,754)	$	1,200,929

(1)Includes customer-related and other derivatives.

(2)Cash collateral pledged and financial instruments pledged is reported in Other assets in the Condensed Consolidated Balance Sheets. In certain instances, the Company is over-collateralized since the actual amount of collateral pledged exceeds the associated financial liability. As a result, the actual amount of collateral pledged that is reported in Other assets may be greater than the amount shown in the table above.

52

NOTE 13. FAIR VALUE

The Company estimates the fair value of certain assets and liabilities for both measurement and disclosure purposes. The fair value hierarchy categorizes the underlying assumptions and inputs to valuation techniques that are used to measure fair value into three levels as follows:

•Level 1 inputs are quoted prices in active markets for identical assets or liabilities that can be accessed as of the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•Level 2 inputs are those other than quoted prices included in Level 1 that are observable for the assets or liabilities, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3 inputs are those that are unobservable or not readily observable for the asset or liability and are used to measure fair value to the extent relevant observable inputs are not available.

Assets and liabilities measured at fair value, by their nature, result in a higher degree of financial statement volatility. See Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for 2023 for a broad discussion of fair value measurement techniques. When available, the Company uses quoted market prices or matrix pricing in active markets to determine fair value and classifies such items as Level 1 or Level 2 assets or liabilities. If quoted market prices in active markets are not available, fair value is determined using third-party broker quotes and/or DCF models incorporating various assumptions including interest rates, prepayment speeds and credit losses. Assets and liabilities valued using broker quotes and/or DCF models are classified as either Level 2 or Level 3, depending on the lowest level classification of an input that is considered significant to the overall valuation.

The Company values assets and liabilities based on the principal market in which each would be sold (in the case of assets) or transferred (in the case of liabilities). The principal market is the forum with the greatest volume and level of activity. In the absence of a principal market, the valuation is based on the most advantageous market. In the absence of observable market transactions, the Company considers liquidity valuation adjustments to reflect the uncertainty in pricing the instruments.

The fair value of a financial asset is measured on a stand-alone basis and cannot be measured as a group, with the exception of certain financial instruments held and managed on a net portfolio basis. In measuring the fair value of a nonfinancial asset, the Company assumes the highest and best use of the asset by a market participant, not just the intended use, to maximize the value of the asset. The Company also considers whether any credit valuation adjustments are necessary based on the counterparty's credit quality. Any models used to determine fair values or validate dealer quotes based on the descriptions below are subject to review and testing as part of the Company's model validation and internal control testing processes.

53

NOTE 13. FAIR VALUE (continued)

The Company's Market Risk Department approves the methodologies used in the estimations of fair value, including the Company's Level 3 assets and liabilities. Price validation procedures are performed, and the results are reviewed for Level 3 assets and liabilities by the Market Risk Department. Price validation procedures performed for these assets and liabilities can include comparing current prices to historical pricing trends by collateral type and vintage, comparing prices by product type to indicative pricing grids published by market makers, and obtaining corroborating dealer prices for significant securities.

The Company reviews the assumptions utilized to determine fair value on a quarterly basis. Any changes in methodologies or significant inputs used in determining fair values are further reviewed to determine if a change in fair value level hierarchy has occurred. At December 31, 2023, the beneficial interest in the Structured LLC was determined to be Level 2 based on observed market execution. As a result of moving further from the purchase date and observed market execution, the Company is relying on a DCF method going forward for valuation. As a result, the $1.1 billion beneficial interest in the Structured LLC transferred from Level 2 to Level 3 during the first quarter of 2024.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring basis by major product category and fair value hierarchy as of the dates indicated:

(in thousands)	Level 1		Level 2		Level 3		Balance at September 30, 2024		Level 1		Level 2		Level 3		Balance at December 31, 2023
Financial assets:
U.S. Treasury securities	$	14,653	$	—	$	—	$	14,653	$	25,409	$	—	$	—	$	25,409
Corporate debt	—		1,203		—		1,203		—		31,590		—		31,590
ABS	—		632,750		—		632,750		—		510,663		—		510,663
Beneficial Interest in Structured LLC	—		—		1,205,775		1,205,775		—		1,122,510		—		1,122,510
MBS	—		5,108,139		—		5,108,139		—		5,349,365		—		5,349,365
Investment in debt securities AFS (2)	$	14,653	$	5,742,092	$	1,205,775	$	6,962,520	$	25,409	$	7,014,128	$	—	$	7,039,537
Trading securities	1,858,365		9,438,857		5,462		11,302,684		1,637,908		6,329,031		936		7,967,875
Federal funds sold and securities purchased under resale agreements or similar arrangements	—		350,119		—		350,119		—		2,112,292		—		2,112,292
RICs HFI (3)	—		—		10,109		10,109		—		—		13,888		13,888
LHFS (1)(4)	—		1,004,462		—		1,004,462		—		19,464		—		19,464
MSRs	—		—		87,192		87,192		—		—		94,266		94,266
Other assets - derivatives (2)	124		858,171		49		858,344		4,807		1,085,333		54		1,090,194
Total financial assets (5)	$	1,873,142	$	17,393,701	$	1,308,587	$	20,575,430	$	1,668,124	$	16,560,248	$	109,144	$	18,337,516
Financial liabilities:
Federal funds purchased and securities loaned or sold under repurchase agreements	$	—	$	100,046	$	—	$	100,046	$	—	$	595,414	$	—	$	595,414
Trading liabilities	2,218,827		246,634		—		2,465,461		2,371,823		327,293		384		2,699,500
Other liabilities - derivatives (2)	—		927,943		178		928,121		5,914		1,466,119		650		1,472,683
Total financial liabilities	$	2,218,827	$	1,274,623	$	178	$	3,493,628	$	2,377,737	$	2,388,826	$	1,034	$	4,767,597

(1)    LHFS disclosed on the Condensed Consolidated Balance Sheets also includes LHFS that are held at the lower of cost or fair value and are not presented within this table.

(2)    Refer to Note 2 for the fair value of investment securities and to Note 12 for the fair values of derivative assets and liabilities on a further disaggregated basis.

(3) Certain RICs collateralized by vehicle titles and RV/marine loans.

(4) Residential mortgage loans and commercial mortgage loans.

(5) Approximately $1.3 billion of these financial assets were measured using model-based techniques, or Level 3 inputs, and represented approximately 6.4% of total assets measured at fair value on a recurring basis and approximately 0.8% of total consolidated assets.

54

NOTE 13. FAIR VALUE (continued)

Valuation Processes and Techniques - Recurring Fair Value Assets and Liabilities

The following is a description of the valuation techniques used for instruments measured at fair value on a recurring basis:

Investments in debt securities AFS

Investments in debt securities AFS are accounted for at fair value. The Company utilizes a third-party pricing service to value its investment securities portfolios on a global basis. Its primary pricing service has consistently proved to be a high quality third-party pricing provider. For those investments not valued by pricing vendors, other trusted market sources are utilized. The Company monitors and validates the reliability of vendor pricing on an ongoing basis, which can include pricing methodology reviews, performing detailed reviews of the assumptions and inputs used by the vendor to price individual securities, and price validation testing. Price validation testing is performed independently of the risk-taking function and can include corroborating the prices received from third-party vendors with prices from another third-party source, reviewing valuations of comparable instruments, comparison to internal valuations, or by reference to recent sales of similar securities.

The classification of securities within the fair value hierarchy is based upon the activity level in the market for the security type and the observability of the inputs used to determine their fair values. Actively traded quoted market prices for debt securities AFS, such as government agency securities, corporate debt, state and municipal securities, and MBS, are not readily available. The Company's principal markets for its investment securities are the secondary institutional markets with an exit price that is predominantly reflective of bid-level pricing in these markets. These investment securities are priced by third-party pricing vendors. The third-party vendors use a variety of methods when pricing these securities that incorporate relevant observable market data to arrive at an estimate of what a buyer in the marketplace would pay for a security under current market conditions. These investment securities are, therefore, considered Level 2.

Certain ABS are valued using DCF models. The DCF models are obtained from a third-party pricing vendor which uses observable market data and therefore are classified as Level 2.

The Company's beneficial interest in the Structured LLC was acquired in December 2023, and is valued using an internally-developed DCF model and is classified as Level 3 at September 30, 2024. Significant assumptions used in evaluation include, discount spread, loss estimates, NOI deterioration, and extension of loans. Significant changes in any of these inputs could result in a higher or lower fair value measurement.

Securities Financing Activities

No quoted prices exist for Securities Financing Activities, so fair value is determined using a DCF technique. Cash flows are estimated based on the terms of the contract. These cash flows are discounted using interest rates appropriate to the maturity of the instrument as well as the nature of the underlying collateral. Securities Financing Activities are classified as Level 2.

LHFI

For certain RICs reported in LHFI, net, the Company has elected the FVO. The estimated fair value of all RICs HFI is estimated using a DCF model and is classified as Level 3.

LHFS

For certain LHFS portfolios, the Company has elected the FVO and the portfolios are measured at fair value on a recurring basis. These loans consisted primarily of loans attributed to CIB whole loan aggregation and bridge lending programs. The fair value of these loans was based on estimated market rates for similar loans and certain forward sale agreements and the loans are considered Level 2. See further discussion below in the section captioned "FVO for Financial Assets and Financial Liabilities."

55

NOTE 13. FAIR VALUE (continued)

MSRs

The Company maintains an MSR asset accounted for at fair value for sold residential real estate loans serviced for others. At September 30, 2024 and December 31, 2023, the balance of these loans serviced for others was $7.7 billion and $8.3 billion, respectively. Changes in fair value of the MSR are recorded through Miscellaneous income, net on the Condensed Consolidated Statements of Operations.

The Company has elected to measure its residential MSRs at fair value to be consistent with the risk management strategy to hedge changes in the fair value of these assets. The fair value of residential MSRs is estimated by using a cash flow valuation model which calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates (reflective of a market participant’s return on an investment for similar assets), servicing costs, and other economic factors which are determined based on current market conditions. Historically, servicing costs and discount rates have been less volatile than prepayment rates, which are directly correlated with changes in market interest rates. Increases in prepayment rates, discount rates and servicing costs result in lower valuations of MSRs. Decreases in the anticipated earnings rate on escrow and similar balances result in lower valuations of MSRs. Assumptions incorporated into the residential MSR valuation model reflect management's best estimate of factors that a market participant would use in valuing the residential MSRs, as well as future expectations. Although sales of residential MSRs do occur, residential MSRs do not trade in an active market with readily observable prices. As deemed appropriate, the Company economically hedges MSRs using interest rate swaps and forward contracts to purchase MBS. See further discussion on these derivative activities in Note 12 to these Condensed Consolidated Financial Statements.

As a benchmark for the reasonableness of the residential MSRs' fair value, opinions of value from brokers are obtained. Brokers provide a range of values based upon their own DCF calculations of our portfolio that reflect conditions in the secondary market and any recently executed servicing transactions. Management compares the internally-developed residential MSR values to the ranges of values received from brokers. If the residential MSRs fair value falls outside of the brokers' ranges, management will assess whether a valuation adjustment is warranted. The residential MSRs value is considered to represent a reasonable estimate of fair value. MSR’s are classified as Level 3.

Gains and losses on MSRs are recognized on the Condensed Consolidated Statements of Operations through Miscellaneous income, net.

Significant assumptions used in the valuation of residential MSRs include CPRs and the discount rate. Other important valuation assumptions include market-based servicing costs and the anticipated earnings on escrow and similar balances held by the Company in the normal course of mortgage servicing activities. Below is a sensitivity analysis of the most significant inputs utilized by the Company in the evaluation of residential MSRs:

•A 10% and 20% increase in the CPR speed would decrease the fair value of the residential servicing asset by $2.4 million and $4.7 million, respectively, at September 30, 2024.

•A 10% and 20% increase in the discount rate would decrease the fair value of the residential servicing asset by $3.3 million and $6.4 million, respectively, at September 30, 2024.

Significant increases/(decreases) in any of those inputs in isolation would result in significantly (lower)/higher fair value measurements, respectively. These sensitivity calculations are hypothetical and should not be considered to be predictive of future performance. Changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption, while in reality changes in one factor may result in changes in another, which may either magnify or counteract the effect of the change. Prepayment estimates generally increase when market interest rates decline and decrease when market interest rates rise. Discount rates typically increase when market interest rates increase and/or credit and liquidity risks increase and decrease when market interest rates decline and/or credit and liquidity conditions improve.

Derivatives

The valuation of these instruments is determined using commonly accepted valuation techniques, including DCF analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable and unobservable market-based inputs. The fair value represents the estimated amount the Company would receive or pay to terminate the contract or agreement, taking into account current interest rates, foreign exchange rates, equity prices and, when appropriate, the current creditworthiness of the counterparties.

56

NOTE 13. FAIR VALUE (continued)

The Company incorporates credit valuation adjustments in the fair value measurement of its derivatives to reflect the counterparty's nonperformance risk, except for those derivative contracts with associated credit support annexes which provide credit enhancements, such as collateral postings and guarantees. The Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy. Certain of the Company's derivatives utilize Level 3 inputs, which are primarily related to total return settlement derivative contracts.

The DCF model is utilized to determine the fair value of the total return settlement derivative contracts. The significant unobservable inputs for total return settlement derivative contracts used in the fair value measurement of the Company's liabilities are discount percentages, which are based on comparable financial instruments. See Note 12 to these Condensed Consolidated Financial Statements for a discussion of derivatives activity.

Trading liabilities

The sales and trading of financial instruments are recorded on the trade date. Trading liabilities includes amounts payable for securities transactions that have not reached their contractual settlement date. Financial instruments owned and securities sold, not yet purchased, are carried at fair value.

Level 3 Rollforward for Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below present the changes in Level 3 balances for those assets and liabilities measured at fair value on a recurring basis for the periods indicated.

	Three months ended September 30, 2024												Three months ended September 30, 2023
(in thousands)	Beneficial Interest in Structured LLC		RICs HFI		MSRs		Derivatives, net		Other		Total			RICs HFI		MSRs		Derivatives, net		Other		Total
Balances, beginning of period	$	1,120,639	$	11,373	$	96,298	$	(146)	$	7,896	$	1,236,060		$	16,983	$	105,241	$	(1,368)	$	2,352	$	123,208
Gains / (losses) in OCI	89,020		—		—		—		—		89,020			—		—		—		—		—
Gains/(losses) in earnings	—		—		(6,755)		17		(3,742)		(10,480)			—		2,215		250		(4)		2,461
Additions/Issuances	—		—		—		—		1,538		1,538			—		—		—		—		—
Transfer from Level 2	—		—		—		—		6		6			—		—		—		—		—
Settlements(1)	(3,884)		(1,264)		(2,351)		—		(236)		(7,735)			(1,546)		(2,933)		—		—		(4,479)
Balances, end of period	$	1,205,775	$	10,109	$	87,192	$	(129)	$	5,462	$	1,308,409		$	15,437	$	104,523	$	(1,118)	$	2,348	$	121,190
Changes in unrealized gains (losses) included in earnings related to balances still held at end of period	$	—	$	—	$	(6,755)	$	17	$	(3,742)	$	(10,480)		$	—	$	2,215	$	250	$	(4)	$	2,461
	Nine months ended September 30, 2024												Nine months ended September 30, 2023
(in thousands)	Beneficial Interest in Structured, LLC		RICs HFI		MSRs		Derivatives, net		Other		Total			RICs HFI		MSRs		Derivatives, net		Other		Total
Balances, beginning of period	$	—	$	13,888	$	94,266	$	(596)	$	552	$	108,110		$	20,924	$	107,383	$	(2,210)	$	139	$	126,236
Gain / (losses) in OCI	106,931		—		—		—		—		106,931			—		—		—		—		—
Gains/(losses) in earnings	—		—		23		467		(1,138)		(648)			—		4,963		1,092		(11)		6,044
Additions/Issuances	—		—		—		—		3,242		3,242			—		—		—		—		—
Transfer from Level 2	1,122,510		—		—		—		5,583		1,128,093			—		—		—		2,220		2,220
Settlements (1)	(23,666)		(3,779)		(7,097)		—		(2,777)		(37,319)			(5,487)		(7,823)		—		—		(13,310)
Balances, end of period	$	1,205,775	$	10,109	$	87,192	$	(129)	$	5,462	$	1,308,409		$	15,437	$	104,523	$	(1,118)	$	2,348	$	121,190
Changes in unrealized gains (losses) included in earnings related to balances still held at end of period	$	—	$	—	$	23	$	467	$	(1,138)	$	(648)		$	—	$	4,963	$	1,092	$	(11)	$	6,044

(1)Settlements include charge-offs, prepayments, paydowns and maturities.

57

NOTE 13. FAIR VALUE (continued)

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis    

The Company may be required to measure certain assets and liabilities at fair value on a nonrecurring basis in accordance with GAAP from time to time. These adjustments to fair value usually result from application of lower-of-cost-or-fair value accounting or certain impairment measures. Assets measured at fair value on a nonrecurring basis that were still held on the balance sheet were as follows at the dates indicated:

(in thousands)	Level 1		Level 2		Level 3		Balance at September 30, 2024		Level 1		Level 2		Level 3		Balance at December 31, 2023
Impaired commercial LHFI	$	—	$	203,197	$	93,712	$	296,909	$	—	$	230,443	$	41,432	$	271,875
Foreclosed assets	—		37,582		—		37,582		—		24,588		—		24,588
Vehicle inventory	—		330,555		—		330,555		—		311,321		—		311,321
LHFS	—		23,705		357,633		381,338		—		—		140,655		140,655
Auto loans impaired due to bankruptcy	—		147,970		—		147,970		—		154,684		—		154,684

Valuation Processes and Techniques - Nonrecurring Fair Value Assets and Liabilities

Impaired commercial LHFI in the table above represents the recorded investment of impaired commercial loans for which the Company measures impairment during the period based on the fair value of the underlying collateral supporting the loan. Written offers to purchase a specific impaired loan are considered observable market inputs, which are considered Level 1 inputs. Appraisals are obtained to support the fair value of the collateral and incorporate measures such as recent sales prices for comparable properties and are considered Level 2 inputs. Loans for which the value of the underlying collateral is determined using a combination of real estate appraisals, field examinations and internal calculations are classified as Level 3. The inputs in the internal calculations may include the loan balance, estimation of the collectability of the underlying receivables held by the customer used as collateral, sale and liquidation value of the inventory held by the customer used as collateral and historical loss-given-default parameters. In cases in which the carrying value exceeds the fair value of the collateral less cost to sell, an impairment charge is recognized.

Foreclosed assets represent the recorded investment in assets taken during the period presented in foreclosure of defaulted loans and are primarily comprised of commercial and residential real properties and generally measured at fair value less costs to sell. The fair value of the real property is generally determined using appraisals or other indications of market value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace.

The Company estimates the fair value of its vehicles, which are obtained either through repossession or lease termination, using historical auction rates and current market values of used cars.

The Company has LHFS portfolios that are measured at fair value on a nonrecurring basis primarily consisting of commercial loans and RICs. The estimated fair value of these LHFS is calculated based on a combination of estimated market rates for similar loans with similar credit risks and a DCF analysis in which the Company uses significant unobservable inputs on key assumptions, including historical default rates and adjustments to reflect voluntary prepayments, prepayment rates, discount rates reflective of the cost of funding, and credit loss expectations.

For loans that are considered collateral-dependent, such as certain bankruptcy loans, impairment is measured based on the fair value of the collateral less its estimated cost to sell. For the underlying collateral, the estimated fair value is obtained using historical auction rates and current market levels of the collateral securing the loans.

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NOTE 13. FAIR VALUE (continued)

The estimated fair value of goodwill is valued using unobservable inputs and is classified as Level 3. Goodwill is written down to fair value when, as a result of an annual or interim goodwill impairment test, an impairment is identified and recognized. Fair value is calculated using widely-accepted valuation techniques, such as the guideline public company market approach (earnings and price-to-tangible book value multiples of comparable public companies) and the income approach (the DCF method). The Company uses a combination of these accepted methodologies to determine the fair valuation of reporting units. Several factors are taken into account, including actual operating results, future business plans, economic projections, and market data. On a quarterly basis, the Company assesses whether or not impairment indicators are present. For information on the Company's goodwill impairment test and the results of the most recent goodwill impairment test, see Note 5 for a description of the Company's goodwill valuation methodology.

Fair Value Adjustments

The following table presents the increases and decreases in value of certain assets that are measured at fair value on a nonrecurring basis for which a fair value adjustment has been included in the Condensed Consolidated Statements of Operations relating to assets held at period-end:

		Three months ended September 30,				Nine months ended September 30,
(in thousands)	Statement of Operations Location	2024		2023		2024		2023
Impaired LHFI	Credit loss expense / (benefit)	$	2,869	$	9,097	$	343	$	21,415
Foreclosed assets	Miscellaneous income, net (1)	—		(290)		(3,983)		(298)
LHFS	Credit loss expense / (benefit)	(33,785)		—		(33,785)		(3,614)
LHFS	Miscellaneous income, net (1)	(8,395)		(18,571)		(9,293)		(24,801)
Auto loans impaired due to bankruptcy	Credit loss expense / (benefit)	5,070		(4,125)		20,807		(5,840)

(1)    Gains are disclosed as positive numbers while losses are shown as a negative number regardless of the line item being affected.

Level 3 Inputs - Significant Recurring and Nonrecurring Fair Value Assets and Liabilities

The following table presents quantitative information about the significant unobservable inputs within significant Level 3 recurring and nonrecurring assets and liabilities at the dates indicated:

(dollars in thousands)	Fair Value at September 30, 2024 (3)		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Financial Assets:
Beneficial interest in Structured LLC	$	1,205,775	DCF	Discount spread	2.75% - 25.00%
				Loss estimate	0.01% -34.50%
				Extension of loan	0 to 60 months
				Expected NOI deterioration	-3.47	%
MSRs	$	87,192	DCF	CPR (2)	1.75% - 100.00% (7.10%)
				Discount rate (1)	9.81	%

(1)    Average discount rate from collateral stratified by loan type and note rate. Weighted average amount was developed by weighting the associated relative UPB.

(2)     Average CPR projected from collateral stratified by loan type and note rate. Weighted average amount was developed by weighting the associated relative UPB.

(3) Excluded insignificant Level 3 assets and liabilities.

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NOTE 13. FAIR VALUE (continued)

(dollars in thousands)	Fair Value at December 31, 2023 (3)		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
MSRs	$	94,266	DCF	CPR (2)	0.00% - 100.00% (7.53%)
				Discount rate (1)	9.81	%

(1), (2), (3) - See corresponding footnotes to the September 30, 2024 Level 3 significant inputs table above.

Fair Value of Financial Instruments

The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company's financial instruments are as follows as of the dates indicated:

	September 30, 2024										December 31, 2023
(in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3		Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	16,704,983	$	16,704,983	$	16,704,983	$	—	$	—	$	13,118,428	$	13,118,428	$	13,118,428	$	—	$	—
Federal funds sold and securities purchased under resale agreements or similar arrangements	8,637,874		8,671,227		—		8,671,227		—		10,238,714		10,234,487		—		10,234,487		—
Investments in debt securities AFS	6,962,520		6,962,520		14,653		5,742,092		1,205,775		7,039,537		7,039,537		25,409		7,014,128		—
Investments in debt securities HTM	9,554,585		8,201,764		—		8,201,764		—		9,039,704		7,562,523		—		7,562,523		—
Trading securities and other investments (2)	11,302,684		11,302,684		1,858,365		9,438,857		5,462		7,967,875		7,967,874		1,637,908		6,329,030		936
LHFI, net	83,125,048		85,885,299		—		203,197		85,682,102		86,115,156		89,544,115		—		230,443		89,313,672
LHFS	1,385,800		1,385,800		—		1,028,167		357,633		160,118		160,119		—		19,464		140,655
Restricted cash	5,104,259		5,104,259		5,104,259		—		—		5,549,701		5,549,701		5,549,701		—		—
MSRs	87,192		87,192		—		—		87,192		94,266		94,266		—		—		94,266
Derivatives	858,344		858,344		124		858,171		49		1,090,194		1,090,194		4,807		1,085,333		54
Financial liabilities:
Deposits (1)	21,418,338		21,585,739		—		21,585,739		—		19,947,868		20,040,000		—		20,040,000		—
Federal funds purchased and securities loaned or sold under repurchase agreements	18,103,213		18,130,629		—		18,130,629		—		16,290,786		16,289,980		—		16,289,980		—
Trading liabilities	2,465,461		2,465,461		2,218,827		246,634		—		2,699,500		2,699,500		2,371,823		327,293		384
Borrowings and other debt obligations	44,433,441		44,830,200		—		39,912,948		4,917,252		44,144,051		44,107,856		—		36,998,432		7,109,424
Derivatives	928,121		928,121		—		927,943		178		1,472,683		1,472,683		5,914		1,466,119		650

(1) This line item excludes deposit liabilities with no defined or contractual maturities.

(2) This line item includes CDs with a maturity greater than 90 days and investments in trading securities.

Valuation Processes and Techniques - Financial Instruments

The preceding tables present disclosures about the fair value of the Company's financial instruments. Those fair values for certain instruments are presented based upon subjective estimates of relevant market conditions at a specific point in time and information about each financial instrument. In cases in which quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. These techniques involve uncertainties resulting in variability in estimates affected by changes in assumptions and risks of the financial instruments at a certain point in time. Therefore, the derived fair value estimates presented above for certain instruments cannot be substantiated by comparison to independent markets. In addition, the fair values do not reflect any premium or discount that could result from offering for sale at one time an entity’s entire holding of a particular financial instrument, nor do they reflect potential taxes and the expenses that would be incurred in an actual sale or settlement. Accordingly, the aggregate fair value amounts presented above do not represent the underlying value of the Company.

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NOTE 13. FAIR VALUE (continued)

The following methods and assumptions were used to estimate the fair value of each class of financial instruments not measured at fair value on the Condensed Consolidated Balance Sheets:

Cash, cash equivalents and restricted cash

Cash and cash equivalents include cash and due from depository institutions, interest-bearing deposits in other banks, federal funds sold, and securities purchased under agreements to resell. The related fair value measurements have been classified as Level 1, since their carrying value approximates fair value due to the short-term nature of the asset.

Restricted cash is related to cash restricted for investment purposes, cash posted for collateral purposes, cash advanced for loan purchases, and lockbox collections. Cash and cash equivalents, including restricted cash, have maturities of three months or less and, accordingly, the carrying amount of these instruments is deemed to be a reasonable estimate of fair value.

Securities Financing Activities

No quoted prices exist for Securities Financing Activities, so fair value is determined using a DCF technique. Cash flows are estimated based on the terms of the contract. These cash flows are discounted using interest rates appropriate to the maturity of the instrument as well as the nature of the underlying collateral. Securities Financing Activities are classified as Level 2. At September 30, 2024, the fair value of the underlying collateral was $52.5 billion before netting of $34.9 billion, all of which was sold or re-pledged.

Investments in debt securities HTM

Investments in debt securities HTM are recorded at amortized cost and are priced by third-party pricing vendors. The third-party vendors use a variety of methods when pricing these securities that incorporate relevant observable market data to arrive at an estimate of what a buyer in the marketplace would pay for a security under current market conditions. These investment securities are, therefore, considered Level 2.

LHFI, net

The fair values of loans are estimated based on groupings of similar loans, including but not limited to stratification by type, interest rate, maturity, and borrower creditworthiness. Discounted future cash flow analyses are performed for these loans incorporating assumptions of current and projected voluntary prepayment speeds. Discount rates are determined using the Company's current origination rates on similar loans, adjusted for changes in current liquidity and credit spreads (if necessary). Because the current liquidity spreads are generally not observable in the market and the expected loss assumptions are based on the Company's experience, these are Level 3 valuations. Impaired loans are valued at fair value on a nonrecurring basis. See further discussion under the section captioned "Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis" above.

LHFS

The Company has LHFS portfolios that are accounted for at the lower of cost or market. Estimated fair value for these portfolios is generally based on prices obtained from agreements to sell the specific assets, if available, recent market transactions or prices expected to be obtained in the subsequent sales for similar assets.

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NOTE 13. FAIR VALUE (continued)

Deposits

For deposits with no stated maturity, such as non-interest-bearing and interest-bearing demand deposit accounts, savings accounts, and certain money market accounts, the carrying value approximates fair values. The fair value of fixed-maturity deposits is estimated by discounting cash flows using currently offered rates for deposits of similar remaining maturities and have been classified as Level 2.

Borrowings and other debt obligations

Fair value is estimated by discounting cash flows using rates currently available to the Company for other borrowings with similar terms and remaining maturities. Certain other debt obligation instruments are valued using available market quotes for similar instruments, which contemplates issuer default risk. The related fair value measurements have generally been classified as Level 2. A certain portion of debt relating to revolving credit facilities is classified as Level 3. Management believes that the terms of these credit agreements approximate market terms for similar credit agreements and, therefore, they are considered to be Level 3.

FVO for Financial Assets and Financial Liabilities

RICs HFI

To reduce accounting and operational complexity, the Company elected the FVO for certain of its RICs HFI. These loans consisted primarily of NPLs acquired by the Company under optional clean-up calls from its non-consolidated Trusts.

LHFS

At September 30, 2024 and December 31, 2023, the Company had LHFS for which the FVO has been elected, primarily related to loans that are attributed to CIB whole loan aggregation and bridge lending programs. Electing the FVO allows the Company to record loans in these programs at fair market value. The Company may enter into hedges on these LHFS portfolios, These hedges are reported at fair value; as a result, the loans and associated hedges are carried at fair value, reducing earnings volatility.

Securities Financing Activities

The Company has elected the FVO for certain of its Securities Financing Activities, primarily to align the accounting with the derivatives that are used to economically hedge changes in fair value of the assets and liabilities. Changes in fair value for Securities Financing Activities under an FVO are recording in non-interest income.

The following table summarizes the differences between the fair value and the principal balance of financial instruments measured at fair value on a recurring basis as of the dates indicated:

	September 30, 2024						December 31, 2023
(in thousands)	Fair Value		Principal Balance		Difference		Fair Value		Principal Balance		Difference
LHFS(1)	$	1,004,462	$	977,099	$	27,363	$	19,464	$	19,389	$	75
RICs HFI	10,109		10,109		—		13,888		13,888		—
Nonaccrual loans	67		67		—		74		74		—
Securities Financing Activities
Federal funds sold and securities purchased under resale agreements or similar arrangements	350,119		350,000		119		2,112,292		2,111,293		999
Federal funds purchased and securities loaned or sold under repurchase agreements	100,046		100,000		46		595,414		595,142		272

(1) LHFS disclosed on the Condensed Consolidated Balance Sheets also includes $381.3 million and $140.7 million of LHFS at September 30, 2024 and December 31, 2023, respectively, that are held at the lower of cost or fair value that are not presented within this table. There were no nonaccrual loans related to the LHFS measured using the FVO.

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NOTE 14. NON-INTEREST INCOME AND OTHER EXPENSES

The following table presents the details of the Company's non-interest income for the following periods:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Non-interest income:
Consumer and commercial fees	$	104,948	$	79,440	$	285,027	$	258,271
Lease income	535,872		617,962		1,688,602		1,866,968
Capital market revenue	102,075		103,675		316,349		217,561
Miscellaneous income, net
Mortgage banking income, net	15,302		784		48,599		9,624
BOLI	15,640		19,389		49,103		49,485
Net gain on sale of operating leases	17,494		12,922		61,847		55,296
Asset and wealth management fees	73,506		62,523		220,615		185,844
(Loss) / gain on non-mortgage loans	(663)		2,058		(2,629)		(8,147)
Other miscellaneous income / (loss), net	(114,180)		(14,360)		(113,147)		(8,397)
Net gain / (loss) on sale of investment securities	55,117		37,048		184,304		108,556
Total non-interest income	$	805,111	$	921,441	$	2,738,670	$	2,735,061

Disaggregation of Revenue from Contracts with Customers

The following table presents the Company's non-interest income disaggregated by revenue source:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Non-interest income:
In-scope of revenue from contracts with customers:
Depository services (1)	$	32,246	$	28,110	$	94,542	$	92,081
Commission and trailer fees (2)	70,439		56,942		210,809		171,442
Interchange income, net (2)	23,023		18,798		62,825		53,321
Underwriting service fees (2)	80,441		38,147		217,176		107,624
Asset and wealth management fees (2)	66,704		26,520		190,282		87,135
Other revenue from contracts with customers (2)	2,034		7,594		6,786		24,518
Total in-scope of revenue from contracts with customers	274,887		176,111		782,420		536,121
Out-of-scope of revenue from contracts with customers:
Consumer and commercial fees (3)	55,049		34,601		135,618		115,571
Lease income	535,872		617,962		1,688,602		1,866,968
Other miscellaneous income, net (3)	(115,814)		55,719		(52,274)		107,845
Net gain / (loss) on sale of investment securities	55,117		37,048		184,304		108,556
Total out-of-scope of revenue from contracts with customers	530,224		745,330		1,956,250		2,198,940
Total non-interest income	$	805,111	$	921,441	$	2,738,670	$	2,735,061

(1) Primarily recorded in the Company's Consolidated Statements of Operations within Consumer and commercial fees.

(2) Primarily recorded in the Company's Consolidated Statements of Operations within Miscellaneous income, net.

(3) The balance presented excludes certain revenue streams that are considered in-scope and presented above.

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NOTE 14. NON-INTEREST INCOME AND OTHER EXPENSES (continued)

Other Expenses

The following table presents the Company's other expenses for the following periods:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Other expenses:
Amortization of intangibles	$	9,538	$	9,301	$	28,664	$	29,896
Deposit insurance premiums and other expenses	12,772		16,175		52,528		58,774
Other administrative and miscellaneous expenses	156,911		98,407		388,133		295,191
Total Other expenses	$	179,221	$	123,883	$	469,325	$	383,861

NOTE 15. INCOME TAXES

An Income tax benefit of $32.2 million and $74.3 million was recorded for the three months and nine months ended September 30, 2024, respectively, compared to a benefit of $147.8 million and $54.9 million for the corresponding periods in 2023. This resulted in an ETR of (20.0)% for the three months ended September 30, 2024, respectively, compared to (527.5%) for the corresponding period in 2023. The ETR for the three months ended June 30, 2024 was (13.7)%. The quarter over quarter change is primarily the result of a decrease in the annual forecasted pretax income during the third quarter of 2024.

The ETR for the three months ended September 30, 2024 when compared to the same period in 2023, was directly impacted by (i) increase in forecasted pre-tax income in 2024 and (ii) a significant increase in electric vehicle tax credits expected to be generated in the fourth quarter 2023.

The Company is subject to the income tax laws of the U.S., its states and municipalities and certain foreign countries. These tax laws are complex and are potentially subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. In establishing a provision for income tax expense, the Company must make judgments and interpretations about the application of these inherently complex tax laws.

Actual income taxes paid may vary from estimates depending upon changes in income tax laws, actual results of operations, and the final audit of tax returns by taxing authorities. Tax assessments may arise several years after tax returns have been filed. The Company reviews its tax balances quarterly and, as new information becomes available, the balances are adjusted as appropriate. The Company is subject to ongoing tax examinations and assessments in various jurisdictions.

In December 2021, a framework known as Pillar Two was established by the OECD. Pillar Two is designed to ensure large multinational companies pay a minimum level of tax on the income arising in each jurisdiction where they have operations. It will be effective for some countries in 2024 and others in future years. At this time, the Pillar Two framework has not been adopted by the U.S., but has been adopted by our parent’s jurisdiction. Any potential tax liability associated with SHUSA’s operations is expected to be accrued and paid by Santander.

With few exceptions, the Company is no longer subject to federal and non-U.S. income tax examinations by tax authorities for years prior to 2011 and state income tax examinations for years prior to 2006.

The Company applies an aggregate portfolio approach whereby income tax effects from AOCI are released only when an entire portfolio (i.e., all related units of account) of a particular type is liquidated, sold or extinguished. 

64

NOTE 15. INCOME TAXES (continued)

The Company had a net deferred tax asset balance of $332.0 million at September 30, 2024 (consisting of a federal deferred tax asset balance of $151.3 million and a state deferred tax asset balance of $180.7 million with respect to jurisdictional netting), compared to a net deferred tax asset balance of $150.1 million at December 31, 2023 (consisting of a state deferred tax asset balance of $234.3 million and a federal deferred tax liability balance of $84.2 million). The $181.9 million change in net deferred tax asset for the period ended September 30, 2024 was primarily due to a decrease in the deferred tax liability related to leasing transactions. Deferred tax assets includes approximately $21.0 million of investment tax credits the Company expects to sell during the fourth quarter of 2024.

NOTE 16. COMMITMENTS, CONTINGENCIES, AND GUARANTEES

Off-Balance Sheet Risk - Financial Instruments

In the normal course of business, the Company utilizes a variety of financial instruments with off-balance sheet risk to meet the financing needs of its customers and manage its exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit, letters of credit, loans sold with recourse, forward contracts, and interest rate and cross currency swaps, caps, and floors. These financial instruments may involve, to varying degrees, elements of credit, liquidity, and interest rate risk in excess of the amount recognized on the Condensed Consolidated Balance Sheets. The contractual or notional amounts of these financial instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, letters of credit and loans sold with recourse is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. For forward contracts and interest rate swaps, caps and floors, the contract or notional amounts do not represent exposure to credit loss. The Company controls the credit risk of its forward contracts and interest rate swaps, caps and floors through credit approvals, limits, and monitoring procedures. See Note 12 to these Condensed Consolidated Financial Statements for discussion of all derivative contract commitments.

The following table details the amount of commitments at the dates indicated:

Other Commitments	September 30, 2024		December 31, 2023
	(in thousands)
Commitments to extend credit	$	24,798,431	$	25,239,691
Letters of credit	1,116,926		1,168,681
Recourse exposure on sold loans	5,302		18,546
Total commitments	$	25,920,659	$	26,426,918

Commitments to Extend Credit

Commitments to extend credit generally have fixed expiration dates, are variable rate, and contain provisions that permit the Company to terminate or otherwise renegotiate the contracts in the event of a significant deterioration in the customer’s credit quality. These arrangements normally require payment of a fee by the customer, the pricing of which is based on prevailing market conditions, credit quality, probability of funding, and other relevant factors. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements.

Included within the reported balances for commitments to extend credit at September 30, 2024 and December 31, 2023 were $3.6 billion and $3.1 billion, respectively, of commitments that can be canceled by the Company without notice.

Commitments to extend credit also include amounts committed by the Company to fund its investments in CRA, LIHTC, and other equity method investments in which it is a limited partner.

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NOTE 16. COMMITMENTS, CONTINGENCIES, AND GUARANTEES (continued)

Letters of Credit

The Company’s letters of credit meet the definition of a guarantee. Letters of credit commit the Company to make payments on behalf of its customers if specified future events occur. The guarantees are primarily issued to support public and private borrowing arrangements. The weighted average term of these commitments at September 30, 2024 was 10.3 months. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. In the event of a requested draw by the beneficiary that complies with the terms of the letter of credit, the Company would be required to honor the commitment. The Company has various forms of collateral for these letters of credit, including real estate assets and other customer business assets. The maximum undiscounted exposure related to these commitments at September 30, 2024 was $1.1 billion. The fees related to letters of credit are deferred and amortized over the lives of the respective commitments and were immaterial to the Company’s financial statements at September 30, 2024. Management believes that the utilization rate of these letters of credit will continue to be substantially less than the amount of the commitments, as has been the Company’s experience to date. The credit risk associated with letters of credit is monitored using the same risk rating system utilized within the loan and financing lease portfolio. As of September 30, 2024 and December 31, 2023, the liability related to unfunded lending commitments was $46.4 million and $60.8 million, respectively.

Unsecured Revolving Lines of Credit

Such commitments arise primarily from agreements with customers for unused lines of credit on unsecured revolving accounts and credit cards, provided there is no violation of conditions in the underlying agreement. These commitments, substantially all of which the Company can terminate at any time, and which do not necessarily represent future cash requirements, are reviewed periodically based on account usage, customer creditworthiness and loan qualifications.

Loans Sold with Recourse

The Company has loans sold with recourse that meet the definition of a guaranty. For loans sold with recourse under the terms of its multifamily sales program with the FNMA, the Company retained a portion of the associated credit risk.

RIC Commitments

The following table summarizes significant liabilities recorded for commitments and contingencies associated with the Company's RIC origination and servicing operations, all of which are included in Accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheets at the dates indicated:

Agreement or Legal Matter	Commitment or Contingency	September 30, 2024		December 31, 2023
		(in thousands)
MPLFA	Revenue-sharing and gain/(loss), net-sharing payments	$	6,719	$	10,302

MPLFA

Under the terms of the MPLFA, SC must make revenue-sharing payments to Stellantis and also must share with Stellantis when residual gains/(losses) on leased vehicles exceed a specified threshold. The MPLFA requires SC to maintain at least $2.5 billion and $2.5 billion for floor plan and retail financing. In turn, Stellantis must provide designated minimum threshold percentages of its Subvention business to SC.

Agreements

In connection with the sale of RICs through securitizations and other sales, SC and SBNA have made standard representations and warranties customary in the consumer finance industry. Violations of these representations and warranties may require SC or SBNA to repurchase loans previously sold to on or off-balance sheet Trusts or other third parties. As of September 30, 2024, there were no loans that were the subject of a demand to repurchase or replace for breach of representations and warranties for SC's or SBNA's ABS or other sales. In the opinion of management, the potential exposure of other recourse obligations related to SC’s RIC sale agreements is not expected to have a material adverse effect on the Company's or SC’s or SBNA's business, consolidated financial position, results of operations, or cash flows.

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NOTE 16. COMMITMENTS, CONTINGENCIES, AND GUARANTEES (continued)

Santander has provided guarantees on the covenants, agreements, and obligations of SC under the governing documents of its warehouse facilities and privately issued amortizing notes. These guarantees are limited to the obligations of SC as servicer.

Since November 2015, SC is party to a forward flow asset sale agreement with a third party under the terms of which SC is committed to sell $350.0 million in charged-off loan receivables in bankruptcy status on a quarterly basis. However, any sale of more than $275.0 million is subject to a market price check. The remaining aggregate commitment as of September 30, 2024 and December 31, 2023 not subject to a market price check was zero.

Other Off-Balance Sheet Risk

Other off-balance sheet risk stems from financial instruments that do not meet the definition of guarantees under applicable accounting guidance and from other relationships that include items such as indemnifications provided in the ordinary course of business and intercompany guarantees.

Legal and Regulatory Proceedings

The Company, including its subsidiaries, is and in the future periodically expects to be party to, or otherwise involved in, various claims, disputes, lawsuits, investigations, regulatory matters and other legal matters and proceedings that arise in the ordinary course of business. In view of the inherent difficulty of predicting the outcome of any such claim, dispute, lawsuit, investigation, regulatory matter and/or legal proceeding, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, the Company generally cannot predict the eventual outcome of the pending matters, the timing of the ultimate resolution of the matters, or the eventual loss, fines or penalties related to the matters, if any. Accordingly, except as provided below, the Company is unable to reasonably estimate a range of its potential exposure, if any, to these claims, disputes, lawsuits, investigations, regulatory matters and other legal proceedings at this time. It is reasonably possible that actual outcomes or losses may differ materially from the Company's current assessments and estimates, and any adverse resolution of any of these matters against it could materially and adversely affect the Company's business, financial position, liquidity, and results of operations.

The Company establishes an accrued liability for legal and regulatory proceedings when those matters present material loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued that are reasonably possible.

As of September 30, 2024 and December 31, 2023, the Company accrued aggregate legal and regulatory liabilities of approximately $53.0 million (which is disclosed net of approximately $140 million of confirmed insurance recovery receivables included in Other assets in the Condensed Consolidated Balance Sheet) and $12.4 million, respectively. Further, the Company estimates the aggregate range of reasonably possible losses for legal and regulatory proceedings, in excess of reserves established, of up to approximately $48.0 million as of September 30, 2024 and $14.6 million as of December 31, 2023. Set forth below are descriptions of the significant lawsuits, regulatory matters, and other legal proceedings to which the Company is subject.

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NOTE 16. COMMITMENTS, CONTINGENCIES, AND GUARANTEES (continued)

Consumer Lending Cases

The Company and its subsidiaries are party to various lawsuits pending in federal and state courts alleging violations of state and federal consumer lending laws, including, without limitation, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, Section 5 of the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Truth in Lending Act, wrongful repossession laws, usury laws and laws related to unfair and deceptive acts or practices. In general, these cases seek damages and equitable and/or other relief.

Enterprise Financial Group v. SC. EFG, a former guaranteed auto protection products and services provider to SC, sued SC for breach of contract, alleging that SC placed non-conforming loans in the program, resulting in EFG losses. The case is pending in Texas District Court, Dallas County, and is captioned Enterprise Financial Group v. SC, Case No. 18-08119. SC asserted a counterclaim against EFG seeking approximately $10.5 million in connection with EFG’s refusal to pay claims. A jury trial concluded on November 2, 2022 and the jury awarded EFG $5 million and SC $4.2 million. On May 9, 2023, the court issued a final judgment awarding EFG approximately $10.6 million, and eliminating the jury award of $4.2 million in favor of SC. On July 17, 2023, the court heard arguments on SC’s motion for judgment notwithstanding the verdict, a new trial and remittitur. The court denied SC's motions for judgment notwithstanding the verdict, new trial, or remittitur. SC's appeal is fully briefed and the appellate court heard oral argument on October 8, 2024.

Real Legacy Assurance ERISA Litigation. On April 13, 2020, participants of the Real Legacy Assurance Plan, a pension plan, filed an amended complaint adding SSLLC as a defendant to an ERISA putative class action pending against the owner of Real Legacy, Real Legacy Board members, the Plan’s trustee, actuaries, and other defendants. The case is pending in the United States District Court for the District of Puerto Rico and captioned Vega-Ortiz et al v. Cooperativa de Seguros Multiples de Puerto Rico, et al, Civ. No. 3:19-cv-02056. The amended complaint alleges that SSLLC served as an investment manager to the Real Legacy Assurance Plan and breached its fiduciary duties by failing to ensure that the plan was adequately funded. On November 24, 2021, the court denied each of the defendants’ motions to dismiss. SSLLC filed its answer and discovery is ongoing. On April 4, 2023, the court granted the plaintiffs' motion for class certification. In August 2024, plaintiffs and SSLLC filed a motion seeking approval of a settlement under which SSLLC will pay plaintiffs $400,000 in exchange for a full release. Banco Popular objected to the settlement.

Santander Consumer USA Holdings Inc. Stockholders Litigation. A consolidated, certified class action litigation is pending in the Court of Chancery of the State of Delaware captioned In re Santander Consumer USA Holdings Inc. Stockholders Litigation, No. 2022-0689, filed by former SC shareholders against SHUSA, Santander and current and former SC directors and officers alleging breaches of fiduciary duty related to SHUSA’s January 2022 acquisition of the remaining minority shares of SC, allegedly resulting in a failure to fairly compensate the minority shareholders. On October 14, 2024, the defendants entered into a definitive settlement agreement resolving the litigation. The settlement agreement contemplates a combined payment by defendants of $162.5 million, inclusive of all attorneys' fees and expenses, and a full and complete release of all claims. Of such amount, a substantial majority will be covered by insurance. The court scheduled an approval hearing for December 17, 2024.

These matters are ongoing and could in the future result in the imposition of damages, fines, or other penalties. No assurance can be given that the ultimate outcome of these matters or any resulting proceedings would not materially and adversely affect the Company's business, financial condition, and results of operations.

Regulatory Investigations and Proceedings

The Company is party to, or is periodically otherwise involved in, reviews, investigations, examinations, and proceedings (both formal and informal), and information-gathering requests, by government and self-regulatory agencies, including the FRB of Boston, the CFPB, the DOJ, the SEC, the CFTC, the Federal Trade Commission and various state regulatory and enforcement agencies.

SanCap

SanCap is cooperating with the SEC in connection with an inquiry focused on compliance with business-related communications on messaging platforms that were not approved by SanCap. The inquiry follows a number of regulatory settlements with other firms covering similar matters.

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NOTE 17. RELATED PARTY TRANSACTIONS

In the normal course of business, the Company conducts business with Santander and its subsidiaries. Santander policy requires that these transactions occur at prevailing market rates and terms, and, where applicable, these transactions are compliant with United States banking regulations. All extensions of credit by (and certain credit exposures of) the Bank to other Santander affiliates are legally required to be secured by eligible collateral. The following disclosures below are the more significant related party transactions entered into:

Debt and derivative activities

The Company and its affiliates have various debt and derivative agreements with Santander. For further details of these agreements, see Note 10 and Note 20 to the Consolidated Financial Statements of the Company's Annual Report on Form 10-K for 2023.

Mezzanine and Stockholder's Equity

On December 21, 2022, the Company issued 500,000 shares of Series E Preferred Stock. Dividends on the Series E Preferred Stock are payable when, as and if authorized by the Company’s Board of Directors or a duly authorized committee thereof. From and including December 21, 2022 to but excluding December 21, 2027, dividends accrue on a non-cumulative basis a rate of 8.41% per annum, payable quarterly in arrears. From and including December 21, 2027, dividends on the Series E Preferred Stock will accrue on a non-cumulative basis at the five-year U.S. Treasury rate as of the most recent re-set dividend determination date plus 4.74% for each dividend re-set period, payable quarterly in arrears. The Company may redeem the Series E Preferred Stock on, among others, any dividend payment date on or after December 31, 2027.

On June 15, 2023, the Company issued 1,000,000 shares of Series F Preferred Stock. Dividends on the Series F Preferred Stock are payable when, as and if authorized by the Company’s Board of Directors or a duly authorized committee thereof. From and including June 15, 2023 to but excluding June 21, 2028, dividends accrue on the Series F Preferred Stock on a non-cumulative basis at a rate of 9.380% per annum, payable quarterly in arrears. From and including June 21, 2028, dividends will accrue on a non-cumulative basis at the five-year U.S. Treasury rate as of the most recent re-set dividend determination date plus 5.467% for each dividend re-set period, payable quarterly in arrears. The Company may redeem the Series F Preferred Stock on, among others, any dividend payment date on or after June 21, 2028.

On December 19, 2023, the Company issued 500,000 shares of Series G Preferred Stock. Dividends on the Series G Preferred Stock are payable when, as and if authorized by the Company’s Board of Directors or a duly authorized committee thereof. From and including December 19, 2023 to but excluding December 21, 2028, dividends accrue on the Series G Preferred Stock on a non-cumulative basis a rate of 8.170% per annum, payable quarterly in arrears. From and including December 21, 2028, dividends will accrue on a non-cumulative basis at the five-year U.S. Treasury rate as of the most recent re-set dividend determination date plus 4.360% for each dividend re-set period, payable quarterly in arrears. The Company may redeem the Series G Preferred Stock on, among others, any dividend payment date on or after December 21, 2028.

As of September 30, 2024, Santander was the sole holder of the Series E, F, and G Preferred Stock.

During the nine months ended September 30, 2024, the Company declared and paid dividends to its common shareholder, Santander, in the amount of $250.0 million. In addition, during the nine months ended September 30, 2024, the Company declared and paid dividends to its preferred shareholder, Santander, in the amount of $132.8 million.

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NOTE 17. RELATED PARTY TRANSACTIONS (continued)

Deposit and checking accounts

Affiliates of Santander that are not consolidated by SHUSA had deposits with SBNA of $225.6 million and $141.8 million as of September 30, 2024 and December 31, 2023, respectively.

Repurchase Agreements

During the three months and nine months ended September 30, 2024, SanCap entered into intercompany repurchase agreements with Santander and its affiliates. The gross principal amount outstanding on these repurchase agreements, which do not eliminate in consolidation, was $617.1 million at September 30, 2024. During the three months and nine months ended September 30, 2024, the amount of income / expense related to this activity was negligible to the overall results of the Company and Santander.

Other Related Party Transactions

In the second quarter, the Company sold Services and Promotions Delaware Corp., a wholly-owned consolidated subsidiary, to a subsidiary of Santander. Refer to Note 1 of the Condensed Consolidated Financial Statements for additional information.

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NOTE 18. BUSINESS SEGMENT INFORMATION

Business Segment Products and Services

The Company’s reportable segments are focused principally around the customers the Company serves. The Company has identified the following reportable segments: Auto, CBB, C&I, CRE, CIB, and Wealth Management.

•The Auto segment includes the Company's consumer and commercial auto loans and leases and the Company's commercial loans to dealers and dealer floor plan financing products. This includes the Company's specialized consumer finance subsidiary focused on vehicle finance and third-party servicing. The specialized consumer finance primary business is the indirect origination of RICs, principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers. The Company offers a full spectrum of auto financing products and services to captive financing companies. These products and services include consumer RICs and leases, as well as dealer loans for inventory, construction, real estate, working capital and revolving lines of credit. The Company also originates vehicle loans through a web-based direct lending program, purchases vehicle RICs from other lenders, and services automobile, recreational and marine vehicle portfolios for other lenders. All intercompany revenue and fees between consolidated affiliates are eliminated in the consolidated results of the Company.

•The CBB segment includes the products and services provided to consumer and small business banking customers, including consumer deposit, small business banking, unsecured lending, and investment services. This segment offers a wide range of products and services to consumers and business banking customers, including demand and interest-bearing demand deposit accounts, money market and savings accounts, CDs, and retirement savings products. It also offers lending products such as unsecured personal loans, credit cards, and small business loans such as business lines of credit. In addition, the Company makes investment services available to its retail customers, including products such as annuities, mutual funds, managed accounts, and insurance products through a networking agreement with a consolidated affiliate.

•The C&I segment currently provides commercial lines, loans, letters of credit, receivables financing, commercial credit cards, and cash management and deposit services to lower middle market commercial customers and to medium- and large-sized commercial customers, as well as financing and deposits for government entities. This segment also provides niche product financing for specific industries.

•The CRE segment offers CRE loans, CEVF, and multifamily loans, as well as cash management and deposit services to customers. This category also includes community development finance activities, including originating CRA-eligible loans and making CRA-eligible investments.

•The CIB segment serves the needs of global corporate and institutional customers by leveraging the international footprint of Santander to provide financing and banking services to corporations with over $500 million in annual revenues. CIB also includes the Company's institutional broker-dealer that provides services in investment banking, sales, trading, and equity research reports. CIB's offerings and strategy are based on Santander's local and global capabilities in wholesale banking.

•The Wealth Management segment consists of the Company's international private banking and financial operations Services include the full range of banking and asset management services to foreign individuals and corporations based primarily in Latin America

The Company also offers customer-related derivatives to hedge interest rate risk, and in the C&I, CRE, and CIB business segments and the dealer commercial lending division of the Auto business segment, offers derivatives relating to foreign exchange and lending arrangements. See Note 12 to these Condensed Consolidated Financial Statements for additional details.

The Other category includes certain immaterial subsidiaries, the unallocated interest expense on the Company's borrowings and other debt obligations and certain unallocated corporate income and indirect expenses.

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NOTE 18. BUSINESS SEGMENT INFORMATION (continued)

The Company's segment results are derived from the Company’s business unit profitability reporting system by specifically attributing managed balance sheet assets, deposits and other liabilities and their related interest income or expense to each of the segments. Funds transfer pricing methodologies are utilized to allocate a cost for funds used or a credit for funds provided to business line deposits, loans and selected other assets using a matched funding concept. The methodology includes a liquidity premium adjustment, which considers an appropriate market participant spread for commercial loans and deposits by analyzing the mix of borrowings available to the Company with comparable maturity periods.

Other income and expenses are managed directly by each reportable segment, including fees, service charges, salaries and benefits, and other direct expenses, as well as certain allocated corporate expenses, and are accounted for within each segment’s financial results. Accounting policies for the lines of business are the same as those used in preparation of the Condensed Consolidated Financial Statements with respect to activities specifically attributable to each business line. However, the preparation of business line results requires management to establish methodologies to allocate funding costs and benefits, expenses, and other financial elements to each line of business. Where practical, the results are adjusted to present consistent methodologies for the segments.

The application and development of management reporting methodologies is a dynamic process and is subject to periodic enhancements. The implementation of these enhancements to the internal management reporting methodology may materially affect the results disclosed for each segment with no impact on consolidated results. Whenever significant changes to management reporting methodologies take place, prior period information is reclassified wherever practicable.

Results of Segments

The following tables present certain information regarding the Company’s segments:

Three months ended	SHUSA Reportable Segments
	Consumer Activities				Commercial Activities
September 30, 2024	Auto		CBB		C&I		CRE		CIB		Wealth Management		Other(1)		Total
	(in thousands)
Net interest income / (expense)	$	907,566	$	360,730	$	92,407	$	121,822	$	25,909	$	53,278	$	(178,685)	$	1,383,027
Non-interest income	545,680		(39,004)		17,793		20,933		152,849		82,105		24,755		805,111
Credit loss expense / (benefit)	519,758		(82,681)		(12,676)		15,940		(8,344)		—		(658)		431,339
Total expenses	771,970		348,303		50,627		33,381		224,781		70,185		96,460		1,595,707
Income/(loss) before income taxes	161,518		56,104		72,249		93,434		(37,679)		65,198		(249,732)		161,092
(1) Other includes the results of the immaterial entities, earnings from non-strategic assets, the investment portfolio, interest expense on SBNA’s and the Company's borrowings and other debt obligations, amortization of intangible assets and certain unallocated corporate income and indirect expenses.

Three months ended	SHUSA Reportable Segments
	Consumer Activities				Commercial Activities
September 30, 2023	Auto		CBB		C&I		CRE		CIB		Wealth Management		Other(1)		Total
	(in thousands)
Net interest income / (expense)	$	926,581	$	407,358	$	80,560	$	115,388	$	48,677	$	66,736	$	(174,619)	$	1,470,681
Non-interest income	623,850		58,682		10,732		8,033		90,219		66,696		63,229		921,441
Credit loss expense / (benefit)	782,505		31,789		(8,292)		55,864		(5,258)		205		(521)		856,292
Total expenses	816,512		360,017		59,041		34,411		159,730		72,911		61,222		1,563,844
Income/(loss) before income taxes	(48,586)		74,234		40,543		33,146		(15,576)		60,316		(172,091)		(28,014)
(1) Refer to corresponding notes above.

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NOTE 18. BUSINESS SEGMENT INFORMATION (continued)

Nine months ended	SHUSA Reportable Segments
	Consumer Activities				Commercial Activities
September 30, 2024	Auto		CBB		C&I		CRE		CIB		Wealth Management		Other (1)		Total
	(in thousands)
Net interest income / (expense)	$	2,716,442	$	1,114,655	$	270,197	$	372,898	$	78,945	$	167,603	$	(556,980)	$	4,163,760
Non-interest income	1,721,271		91,604		49,541		56,986		502,304		241,848		75,116		2,738,670
Credit loss expense / (benefit)	1,347,400		360		(54,782)		57,376		(30,443)		—		(2,342)		1,317,569
Total expenses	2,334,758		1,054,475		158,410		102,052		629,680		200,343		228,297		4,708,015
Income/(loss) before income taxes	755,555		151,424		216,110		270,456		(17,988)		209,108		(707,819)		876,846
Total assets	62,094,480		9,891,925		3,977,854		23,621,631		27,474,238		8,137,399		32,821,822		168,019,349
(1) Refer to corresponding notes above.

Nine months ended	SHUSA Reportable Segments
	Consumer Activities				Commercial Activities
September 30, 2023	Auto		CBB		C&I		CRE		CIB		Wealth Management		Other (1)		Total
	(in thousands)
Net interest income / (expense)	$	2,754,863	$	1,219,442	$	243,623	$	333,455	$	170,311	$	210,392	$	(459,739)	$	4,472,347
Total non-interest income	1,924,771		188,389		38,478		25,682		268,014		187,203		102,524		2,735,061
Credit loss expense / (benefit)	1,296,120		238,596		(13,348)		111,931		(19,391)		205		(6,570)		1,607,543
Total expenses	2,466,643		1,093,160		180,572		100,919		398,206		208,931		215,700		4,664,131
Income/(loss) before income taxes	916,871		76,075		114,877		146,287		59,510		188,459		(566,345)		935,734
Total assets	62,945,184		12,601,046		4,871,660		22,488,032		27,502,833		7,404,818		27,839,590		165,653,163
(1) Refer to corresponding notes above.

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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

SHUSA is the parent holding company of SBNA, a national banking association; SC, a consumer finance company headquartered in Dallas, Texas; BSI, a financial services company headquartered in Miami, Florida that offers a full range of banking services to foreign individuals and corporations based primarily in Latin America; SanCap, an institutional broker-dealer headquartered in New York, which has significant capabilities in market-making via an experienced fixed-income sales and trading team and a focus on structuring and advisory services for asset originators in the real estate and specialty finance markets; SSLLC, a broker-dealer headquartered in Boston, Massachusetts; and several other subsidiaries. SHUSA is headquartered in Boston and SBNA's home office is in Wilmington, Delaware. SSLLC is a registered investment adviser with the SEC. SHUSA's two largest subsidiaries by asset size and revenue are SBNA and SC. SHUSA is a wholly-owned subsidiary of Santander.

The Company specializes in consumer financing focused on vehicle finance, servicing of third-party vehicle financing, and delivering service to dealers and customers across the full credit spectrum. This includes indirect origination and servicing of vehicle loans and leases, principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers, origination of vehicle loans through a web-based direct lending program, purchases of vehicle loans from other lenders, and servicing of automobile and recreational and marine vehicle portfolios for other lenders. The Company sells consumer vehicle loans and leases through flow agreements and, when market conditions are favorable, it accesses the ABS market through securitizations of consumer vehicle loans and leases.

Since May 2013, under the MPLFA with Stellantis, the Company has operated as Stellantis' preferred provider for consumer loans, leases and dealer loans and provides services to Stellantis customers and dealers under the CCAP brand. In the second quarter of 2022, the Company announced it had reached an agreement with Stellantis to amend and extend the MPLFA through December 2025. In June 2022, the Company launched a preferred lender, full spectrum financing program in partnership with MMNA to provide customer and dealer financing programs that will help MMNA achieve its goal of improving the car-buying experience.

During the second half of 2023, the Company entered into numerous new lending agreements with various auto OEMs. These new agreements reinforce the Company’s leadership in the U.S. auto finance market and commitment to forging deep, multi-geography relationships with automotive manufacturers catering to customers across the credit spectrum. These various OEMs have a diverse product lineup, including an increased focus on electric vehicles. In addition, the Company has been chosen by LendingClub to be its primary loan servicer for its auto refinance program.

In addition to specialized consumer finance, the Company also attracts deposits and provides other retail banking services through its network of retail branches with locations in Connecticut, Delaware, Florida, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island and originates small business, middle market, large and global commercial loans, multifamily loans, and other consumer loans and leases throughout the Mid-Atlantic and Northeastern areas of the United States. For large institutional investors, the Company provides structured products, emerging markets credit and U.S. investment grade credit, U.S. rates, short-term fixed-income, debt and equity capital markets, investment banking, exchange-traded derivatives, and cash equities, benefiting from a combination of Santander’s global reach and access to financial hubs together with extensive local market knowledge and regional expertise.

The Company uses its deposits, public and private borrowings, as well as other financing sources, to fund its loan and investment portfolios.

In December 2023, SBNA acquired a 20 percent interest in the Structured LLC for approximately $1.1 billion. The Structured LLC was established by the FDIC to hold and service a $9.0 billion portfolio primarily consisting of New York based rent-controlled and rent-stabilized multifamily loans retained by the FDIC following a recent bank failure. SBNA's 20 percent interest is reported as an AFS debt security that had a fair value of approximately $1.2 billion and $1.1 billion at September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, SBNA serviced approximately $8.7 billion of multi-family loans for the Structured LLC and receives a market rate servicing fee in the accompanying Condensed Consolidated Statements of Operations.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

ECONOMIC AND BUSINESS ENVIRONMENT

Overview

The unemployment rate at September 30, 2024 was 4.1% compared to 4.1% at June 30, 2024 and 3.8% one year ago. According to the U.S. Bureau of Labor Statistics, employment continued to trend up in food services and drinking places, government, health care, social assistance, and construction.

Market year-to-date returns for the following indices based on closing prices for the period indicated were:

	September 30, 2024
Dow Jones Industrial Average	12.3%
S&P 500	20.8%
NASDAQ Composite	21.2%

At its September 2024 meeting, the FOMC lowered the federal funds rate target range of 4.75% - 5.00%. The FOMC continues to focus its policy making on maximum employment and achieving a 2.0% inflation target rate.

The ten-year Treasury bond rate at September 30, 2024 was 3.80%, down from 3.87% at December 31, 2023.

One of the primary metrics used by the market to monitor the strength of the used car market is the Manheim Used Vehicle Index. The Manheim Used Vehicle Value Index, based on the 1997 Manheim based index, decreased from 204 at December 31, 2023 to 203 at September 30, 2024.

Recent Events Affecting the Financial Services Industry

In response to the current interest rate environment and recent events affecting the financial services industry, the Company has enhanced its monitoring of interest rate and liquidity risks. Additional information related to these matters can be found in the sections of this MD&A captioned "Deposits", "Bank Regulatory Capital", "Liquidity and Capital Resources", and "Asset and Liability Management".

The failure of several large U.S. banking institutions in early 2023 has led to increased market uncertainty. The Company was not materially impacted by these events; however, changing market conditions are considered a significant risk factor to the Company. These factors have increased competition and pricing on customer deposits over the short and medium term, and heightened market and regulatory focus and reform on liquidity, capital, and interest rate risk. As a result, the FDIC published a rule on November 16, 2023 to charge certain banks a special assessment to recover the costs associated with protecting uninsured depositors following the bank closures during 2023. Based on the initial final rule, SBNA would be required to pay a total of $61.5 million over the course of eight consecutive quarters beginning with the first quarter 2024 assessment period. SBNA accrued for the full amount of the special assessment during the fourth quarter of 2023. In the first quarter of 2024, the FDIC communicated that it would increase the assessment for all banks, which was reported in its June 2024 special assessment invoice. During the second quarter of 2024, SBNA recorded an additional $10.7 million to be paid over the course of two additional quarters. Refer to the “Regulatory Matters” section of this MD&A for further details. These changing market conditions and uncertainty will likely present challenges in the growth of net interest income, and increased credit risk and associated credit loss expense, and could have an overall impact on the Company's results of operations. It is not possible to quantify the impact of changing market conditions, uncertainty, or regulatory action on the Company's results of operations.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Credit Rating Actions

The following table presents Moody’s, S&P and Fitch credit ratings for SBNA, SHUSA, and Santander senior debt / long-term issuer:

	SANTANDER (1)	SHUSA	SBNA (2)	Overall Outlook
Fitch	A / A-	BBB+	BBB+	Stable
Moody's	A2 / Baa1	Baa2	Baa1	Stable
S&P	A+ / A-	BBB+	A-	Stable

(1) Senior preferred debt / senior non-preferred rating

(2) Moody's rating represents SBNA long-term issuer rating

SHUSA funds its operations independently of the other entities owned by Santander, and believes its business is not necessarily closely related to the business or outlook of other entities owned by Santander. Future changes in the credit ratings of its parent, Santander, or the Kingdom of Spain, however, could impact SHUSA's or its subsidiaries' credit ratings, and any other change in the condition of Santander could affect SHUSA.

REGULATORY MATTERS

The activities of the Company and its subsidiaries are subject to regulation under various U.S. federal laws and regulatory agencies which impose regulations, supervise and conduct examinations, and may affect the operations and management of the Company and its ability to take certain actions, including making distributions to our parent, Santander. The Company is regulated on a consolidated basis by the Federal Reserve, including the FRB of Boston, and the CFPB. The Company's subsidiaries are further supervised by the OCC, the FRB of Atlanta, and the New York Department of Financial Services.

The Federal Reserve tailors its supervisory programs and regulatory requirements by category based on firm-specific characteristics such as total assets, cross-jurisdictional activity, and nonbank asset or off-balance sheet exposure. As of September 30, 2024, SHUSA was designated a Category IV institution under the Federal Reserve's tailoring rule. Institutions that change to a higher category would become subject to the requirements of the new category, as outlined by the Federal Reserve, generally within two quarters of the change in category.

On July 27, 2023, the regulatory agencies issued an NPR to modify the definition of cross-jurisdictional activity, which would expand the scope of exposures included in the measurement of cross-jurisdictional activity and has the potential to move certain firms into a higher supervisory category under the Federal Reserve’s tailoring rule. The Company does not expect to be materially impacted by this NPR once finalized.

Payment of Dividends

SHUSA is the parent holding company of SBNA. SHUSA and SBNA are subject to various regulatory restrictions relating to the payment of dividends, including regulatory capital minimums and the requirement to remain "well-capitalized" under prompt corrective action regulations. Refer to the "Liquidity and Capital Resources" section of this MD&A for detail of the capital actions of the Company and its subsidiaries during the period.

Regulatory Capital Requirements

U.S. Basel III regulatory capital rules are applicable to both SHUSA and SBNA.

These rules include prompt corrective action thresholds that require banking organizations, including the Company and SBNA, to maintain a minimum CET1 capital ratio of 4.5%, a Tier 1 capital ratio of 6.0%, a total capital ratio of 8.0% and a minimum leverage ratio, calculated as the ratio of Tier 1 capital to average consolidated assets for the quarter, of 4.0%. A further capital conservation buffer of 2.5% above these minimum ratios is required for banking institutions to make capital distributions, including paying dividends.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

As described in Note 1 to the Condensed Consolidated Financial Statements, on January 1, 2020, we adopted the CECL standard, which upon adoption resulted in a reduction to our opening retained earnings balance, net of income tax, and an increase to the allowance for loan losses of approximately $2.5 billion. The U.S. banking agencies in December 2018 approved a final rule to address the impact of CECL on regulatory capital by allowing banking organizations, including the Company, the option to phase in the day-one impact of CECL until the first quarter of 2023. On March 26, 2020, the U.S. banking agencies issued an interim final rule that provides banking organizations with an alternative option to delay for two years an estimate of CECL’s effect on regulatory capital relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period. SHUSA remains in the three-year transition period. This interim rule was subsequently updated with technical amendments in a final rule dated September 30, 2020, which was elected by the Company.

See the "Bank Regulatory Capital" section of this MD&A for the Company's capital ratios under Basel III standards. The implementation of certain regulations and standards relating to regulatory capital could disproportionately affect the Company's regulatory capital position relative to that of its competitors, including those that may not be subject to the same regulatory requirements as the Company.

Material restrictions can be imposed on SBNA, including restrictions on interest payable on accounts, dismissal of management and, in critically undercapitalized situations, appointment of a receiver or conservator. Critically undercapitalized banks generally may not make any payment of principal or interest on their subordinated debt and all but well-capitalized banks are prohibited from accepting brokered deposits without prior regulatory approval. Pursuant to the FDIA and OCC regulations, institutions which are not categorized as well-capitalized or adequately-capitalized are restricted from making capital distributions, which include cash dividends, stock redemptions or repurchases, cash-out mergers, interest payments on certain convertible debt and other transactions charged to the capital account of the institution. At September 30, 2024, SBNA met the criteria to be classified as “well-capitalized.”

On March 4, 2020, the Federal Reserve adopted a final rule to simplify capital rules for large banks. Under the final rule, firms' supervisory stress test results are now used to establish the size of the SCB requirement. The SCB is calculated as the maximum decline in CET1 in the severely adverse scenario (subject to a 2.5% floor) plus four quarters of dividends. The rule results in new firm-specific regulatory capital expectations which are equal to 4.5% of CET1 plus the SCB, any GSIB surcharge, and any countercyclical capital buffer. The GSIB buffer is applicable only to the largest and most complex firms and does not apply to SHUSA. In the event a firm falls below its new minimums, the rule imposes restrictions on capital distributions and discretionary bonuses. Firms continue to submit a capital plan annually. Supervisory expectations for capital planning processes do not change under the final rule. As of September 30, 2024, SHUSA's SCB CET1 minimum requirement was 7.0%. SHUSA’s SCB CET1 minimum requirement increased to 8.0% as of October 1, 2024.

On July 27, 2023, the federal banking agencies issued a capital proposal that would make significant changes to the regulatory capital rules applicable to large banking organizations (including SHUSA and SBNA) and banking organizations with significant trading activity. This proposal would implement the final elements of the Basel III capital framework and make other changes to the regulatory capital rules in response to recent bank failures. The capital proposal would establish the expanded risk-based approach for calculating RWAs that would apply to large banking organizations. The expanded risk-based approach would include a new more risk-sensitive standardized approach for measuring credit risk and operational risk. It would also include new standardized approaches for measuring market risk and credit valuation adjustment risk but would allow the use of internal models for market risk in certain circumstances with regulatory approval. Under the capital proposal, a large banking organization would be required to calculate its risk-based capital ratios under both the expanded risk-based approach and the current standardized approach and would use the lower of the two. All capital buffer requirements, including the SCB requirement, would apply regardless of whether the expanded risk-based approach or the existing standardized approach produces the lower ratio.

The total RWA calculation used in the expanded risk-based approach would be phased in over a three-year period. The requirement to reflect AOCI in regulatory capital would also be phased in over a three-year period. All other elements of the calculation of regulatory capital would apply on the effective date of the final rule. On October 20, 2023, the federal banking agencies announced that they extended the comment period on the capital proposal from November 30, 2023 until January 16, 2024. In addition to pushing back the comment deadline, the Federal Reserve indicated it would begin collecting data to gather more information from the banks affected by the proposal. That data collection also ended on January 16, 2024. The proposed rules and their impact on SHUSA are under review.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

On July 10, 2024, Federal Reserve Chair Jerome Powell indicated during a hearing with the House Financial Services Committee plans for a re-proposal of the rules which would include broad and material changes from the initial proposal. On September 10, 2024, Federal Reserve Vice Chair of Supervision Michael Barr gave a speech informing institutions of the nature of the changes in their current form. Most notably, the rules would be tailored by institution size and, for those with total assets between $100 and $250 billion, a majority of the new requirements would no longer apply. These changes have not yet been made final by the Federal Reserve, and it is expected that an implementation timeline will be released once the regulatory agencies have agreed on the substance of the changes.

Liquidity Rules

The Federal Reserve, the FDIC, and the OCC have established a rule to implement the Basel III LCR for certain internationally active banks and nonbank financial companies, and a modified version of the LCR for certain depository institution holding companies that are not internationally active. The LCR is designed to ensure that a banking entity maintains an adequate level of unencumbered high-quality liquid assets equal to its expected net cash outflow for a 30-day time horizon. Smaller covered companies (but with more than $50 billion in assets) such as the Company are required to calculate the LCR monthly.

Resolution Planning

The DFA requires the Company to prepare and update resolution plans. The 165(d) resolution plan must assume that the covered company is resolved under the U.S. Bankruptcy Code and that no “extraordinary support” is received from the U.S. or any other government. The most recent 165(d) resolution plan was submitted to the Federal Reserve and FDIC in June 2022. In addition, under amended FDIA rules, the IDI resolution plan rule requires that a bank with assets of $50 billion or more develop a plan for its resolution that supports depositors’ rapid access to their insured deposits, maximizes the net present value return from the sale or disposition of its assets, and minimizes the amount of any loss realized by creditors in resolution.

On June 20, 2024, the FDIC issued a final rule that took effect on October 1, 2024, which revises the IDI resolution planning requirements. The final rule requires IDIs with assets of $100 billion or more, including SBNA, to submit a full resolution plan every three years, with interim supplements filed in the off-years.

Long-Term Debt Requirements

On July 28, 2023, the Federal Reserve and FDIC issued an NPR that would require banks with total assets of $100 billion or more to maintain a layer of long-term debt from the holding company to improve financial stability by increasing the resolvability and resiliency of such institutions. By requiring each such large bank to maintain a minimum amount of long-term debt to absorb losses, the proposal would increase the options available to resolve such banks in case of failure. Additionally, by reducing the risk that uninsured depositors would face losses, long-term debt can reduce the speed and severity of bank runs and limit the risk of contagion when a bank is under stress. The proposal would provide a three-year phase-in period and would also allow certain outstanding long-term debt to count toward the minimum requirements to provide banks with a reasonable period to transition to the required characteristics of eligible long-term debt instruments. Comments on the proposal were due on November 30, 2023. SHUSA remains subject to the TLAC requirements outlined below.

Deposit Insurance and Assessments

On October 18, 2022, the FDIC adopted a final rule, applicable to all IDIs, to increase the initial base deposit insurance assessment rate schedules uniformly by two basis points consistent with the amended restoration plan approved by the FDIC on June 21, 2022. The FDIC indicated that it was taking this action in order to restore the DIF reserve ratio to the required statutory minimum of 1.35% by the statutory deadline of September 30, 2028. The FDIC indicated that the reserve ratio had declined below this level because of the increase in insured deposits since the start of the pandemic and other factors that affect the level of the DIF. Under the final rule, the increase in rates began with the first quarterly assessment period of 2023 and will remain in effect unless and until the reserve ratio meets or exceeds 2% in order to support growth in the DIF in progressing toward the FDIC’s long-term goal of a 2% reserve ratio. The increase in assessment rates applies to SBNA.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The recent failure of several large U.S. banking institutions has led to increased market uncertainty. Under the FDIA, the loss to the DIF arising from the use of the systemic risk exception must be recovered through one or more special assessments on IDIs, depository institution holding companies, or both, as the FDIC determines to be appropriate. On May 11, 2023, the FDIC issued for public comment a proposed rule to impose a special assessment on IDIs to recover the loss to the DIF resulting from the use of the systemic risk exception to protect the uninsured depositors of the failed U.S. banking institutions. The final rule was issued on November 16, 2023. Under the final rule, the FDIC would collect a special assessment from IDIs at a quarterly rate of approximately 3.36 basis points over eight quarterly assessment periods, starting with the first quarterly assessment period of 2024. In June 2024, the FDIC added an additional assessment to be collected at a quarterly rate of approximately 2.34 basis points over an additional two quarters, resulting in an additional accrual of $10.7 million that was recorded during the second quarter of 2024. The assessment base for the special assessment is equal to an IDI’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured deposits held by the IDI. The special assessment is a tax-deductible operating expense for IDIs, and the effect on income of the entire amount of the special assessment will occur in one quarter for the IDIs subject to the assessment. The total impact of the special assessment is $72.1 million.

TLAC

The TLAC Rule requires certain U.S. organizations to maintain a minimum amount of loss-absorbing instruments, including a minimum amount of unsecured LTD. The TLAC Rule applies to U.S. GSIBs and to IHCs with $50 billion or more in U.S. non-branch assets that are controlled by a global systemically important FBO. The Company is such an IHC.

Under the TLAC Rule, companies are required to maintain a minimum amount of TLAC, which consists of a minimum amount of LTD and Tier 1 capital. As a result, SHUSA must hold the higher of 18% of its RWAs or 9% of its total consolidated assets in the form of TLAC, of which 6% of its RWAs or 3.5% of total consolidated assets must consist of LTD. In addition, SHUSA must maintain a TLAC buffer composed solely of CET1 capital and will be subject to restrictions on capital distributions and discretionary bonus payments based on the size of the TLAC buffer it maintains.

Volcker Rule

Section 13 of the BHCA, commonly referred to as the “Volcker Rule,” prohibits a “banking entity” from engaging in “proprietary trading” or engaging in any of the following activities with respect to a Covered Fund: (i) acquiring or retaining any equity, partnership or other ownership interest in the Covered Fund; (ii) controlling the Covered Fund; or (iii) engaging in certain transactions with the fund if the banking entity or any affiliate is an investment adviser or sponsor to the Covered Fund. These prohibitions are subject to certain exemptions for permitted activities.

Because the term “banking entity” includes an IDI, a depository institution holding company and any of their affiliates, the Volcker Rule has sweeping worldwide application and covers entities such as Santander, the Company, and certain of the Company’s subsidiaries (including SBNA and SC), as well as other Santander subsidiaries in the United States and abroad.

The Company implemented certain policies and procedures, training programs, recordkeeping, internal controls and other compliance requirements that were necessary to comply with the Volcker Rule. As required by the Volcker Rule, the compliance infrastructure has been tailored to each banking entity based on its size and its level of trading and Covered Fund activities. SHUSA's compliance program includes, among other things, processes for prior approval of new activities and investments permitted under the Volcker Rule, and testing and auditing for compliance.

Risk Retention Rule

The Federal Reserve's final credit risk retention rule generally requires sponsors of ABS to retain at least five percent of the credit risk of the assets collateralizing ABS. SHUSA, primarily through SC and SBNA, is an active participant in the structured finance markets and complies with these retention requirements.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Market Risk Rule

The market risk rule requires certain national banks to measure and hold risk-based regulatory capital for the market risk of their covered positions. The bank must measure and hold capital for its market risk using its internal risk-based models. The market risk rule outlines quantitative requirements for the bank's internal risk-based models, as well as qualitative requirements for the bank's management of market risk. Banks subject to the market risk rule must also measure and hold market risk regulatory capital for the specific risk associated with certain debt and equity positions.

A bank is subject to the market risk capital rules if its consolidated trading activity, defined as the sum of trading assets and liabilities as reported in its FFIEC 031 and FR Y-9C for the previous quarter, equals the lesser of: (1) 10 percent or more of the bank's total assets as reported in its Call Report and FR Y-9C for the previous quarter, or (2) $1 billion or more. The Bank and the Company are required to comply with the market risk component within RWAs of the risk-based capital ratios and submit the FFIEC 102 - Market Risk Regulatory Report.

Transactions with Affiliates

Depository institutions must remain in compliance with Sections 23A and 23B of the Federal Reserve Act and the Federal Reserve's Regulation W, which governs transactions between SBNA and affiliated companies and individuals. Section 23A imposes limits on certain specified “covered transactions,” which include loans, lines and letters of credit to affiliated companies or individuals, and investments in affiliated companies, as well as certain other transactions with affiliated companies and individuals.

Section 23B of the Federal Reserve Act prohibits a depository institution from engaging in certain transactions with affiliates unless the transactions are considered arms'-length. As a U.S. domiciled subsidiary of a global parent with significant non-bank affiliates, the Company faces elevated compliance risk in this area.

Regulation AB II

Regulation AB II, among other things, expanded disclosure requirements and modified the offering and shelf registration process for ABS. SC must comply with these rules, which impact all offerings of publicly registered ABS and all reports under the Exchange Act, for outstanding publicly-registered ABS, and affect SC's public securitization platform.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

CRA

SBNA is subject to the requirements of the CRA, which requires the appropriate federal financial supervisory agency to assess an institution's record of helping to meet the credit needs of the local communities in which it is located. SBNA's current rating is Outstanding, the second consecutive examination period for which SBNA has received the highest rating possible. The OCC takes into account SBNA’s CRA rating in considering certain regulatory applications SBNA makes, including applications related to establishing and relocating branches, and the Federal Reserve does the same with respect to certain regulatory applications the Company makes.

In October 2023, the supervisory agencies jointly adopted a final CRA rule to modernize the regulation. The rule intends to adapt to industry changes, such as the growth of online, mobile, and branchless banking and hybrid models, while continuing a focus on low and moderate communities.

The rule also seeks to introduce greater clarity and consistency by implementing a metrics-based approach to evaluate performance and expanding activity that may be considered for CRA credit. This results in significant data collection and reporting requirements for banks with over $10 billion in assets such as SBNA. The rule also imposes new criteria for banks to establish assessment areas outside of the communities in which they have a physical presence if certain criteria are met.

In March 2024, a preliminary injunction was granted to pause implementation of the new rule while the Federal District Court for the Northern District of Texas decides the merits of a lawsuit brought by the American Bankers Association against the regulatory agencies for exceeding their statutory authority in adopting the rule.

SBNA remains committed to the goals of the CRA and supports efforts to modernize the rule through greater transparency regarding evaluation ratings, promoting consistent interpretations of CRA, and encouraging increased economic development in low and moderate-income communities. Management continues to monitor he court proceedings and will adjust SBNA's CRA plans once the status of the new rule becomes known.

Broker-Dealer Regulation

The Broker-Dealers are registered with the SEC and subject to the regulation of the SEC, FINRA, the CFTC, the CME, and the NFA. These entities are subject to the SEC’s uniform net capital rule, which requires the maintenance of minimum net capital levels. In addition, these entities are required to maintain proper controls over customer funds and securities and ensure that customer assets are not used for the benefit of the Broker-Dealer. These requirements also restrict the Broker-Dealer’s ability to withdraw capital. Prior written notification to and approval from the applicable regulators is required for withdrawals exceeding 30 percent of the Broker-Dealer’s excess net capital and also where the Broker-Dealer’s net capital would be less than 25 percent of deductions from its net worth in computing net capital.

Edge Act Corporation Requirements

Edge Act corporations such as BSI are chartered under Section 25A of the Federal Reserve Act. These entities are subject to specific regulatory requirements under Regulation K. Permissible activities of Edge Act and agreement corporations include those incidentals to international or foreign business. Deposit-taking, credit, and fiduciary and investment advisor services are subject to applicable Federal Reserve regulations. Edge Act corporations are also subject to the USA Patriot Act as well as all applicable laws and regulations designed to combat money laundering and the financing of terrorist activities.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

RESULTS OF OPERATIONS

CONSOLIDATED AVERAGE BALANCE SHEET / NET INTEREST MARGIN ANALYSIS

CONSOLIDATED AVERAGE BALANCE SHEET / NET INTEREST MARGIN ANALYSIS
	Three months ended September 30, 2024 and 2023
	2024 (1)						2023 (1)						Interest		Change due to
(dollars in thousands)	Average Balance		Interest		Yield/  Rate(2)		Average Balance		Interest		Yield/ Rate(2)		Increase/(Decrease)		Volume		Rate
Interest-earning deposits	$	12,727,793	$	222,492	6.99	%	$	11,523,253	$	218,925	7.60	%	$	3,567	$	15,364	$	(11,797)
Federal funds sold and securities purchased under resale or similar agreements, gross (3)	54,254,688		728,670		5.37	%	48,147,107		580,720		4.82	%	147,950		77,881		70,069
Federal funds sold and securities purchased under resale or similar agreements, netting	(42,098,401)						(37,774,270)
Federal funds sold and securities purchased under resale or similar agreements, net	12,156,287						10,372,837
AFS	6,867,852		93,057		5.42	%	6,360,187		66,773		4.20	%	26,284		5,667		20,617
HTM	9,491,578		54,371		2.29	%	9,227,351		46,173		2.00	%	8,198		1,352		6,846
Trading securities	12,487,618		150,944		4.83	%	8,846,360		106,921		4.83	%	44,023		44,023		—
Other investments	1,333,486		10,372		3.11	%	1,300,741		12,172		3.74	%	(1,800)		316		(2,116)
TOTAL SECURITIES FINANCING ACTIVITIES, INVESTMENTS AND INTEREST-EARNING DEPOSITS	$	55,064,614	$	1,259,906	9.15	%	$	47,630,729	$	1,031,684	8.66	%	$	228,222	$	167,492	$	60,730
LOANS (4):
C&I	10,270,070		117,079		4.56	%	13,756,417		125,124		3.64	%	(8,045)		(19,831)		11,786
CRE	8,823,284		168,094		7.62	%	8,609,794		166,584		7.74	%	1,510		4,029		(2,519)
Other commercial loans	7,791,979		104,807		5.38	%	7,330,746		88,440		4.83	%	16,367		5,825		10,542
Multifamily	10,177,761		125,037		4.91	%	10,794,348		134,236		4.97	%	(9,199)		(7,594)		(1,605)
Total commercial loans	37,063,094		515,017		5.56	%	40,491,305		514,384		5.08	%	633		(17,571)		18,204
Consumer loans:
Residential mortgages	4,755,796		43,356		3.65	%	4,959,907		43,369		3.50	%	(13)		314		(327)
Home equity loans and lines of credit	2,211,267		44,133		7.98	%	2,627,286		51,216		7.80	%	(7,083)		(8,291)		1,208
Total consumer loans secured by real estate	6,967,063		87,489		5.02	%	7,587,193		94,585		4.99	%	(7,096)		(7,977)		881
RICs and auto loans	45,296,016		1,491,109		13.17	%	44,695,318		1,373,171		12.29	%	117,938		18,634		99,304
Personal unsecured	2,936,495		72,155		9.83	%	4,601,412		132,212		11.49	%	(60,057)		(42,917)		(17,140)
Other consumer	43,391		654		6.03	%	70,776		1,090		6.16	%	(436)		(413)		(23)
Total consumer	55,242,965		1,651,407		11.96	%	56,954,699		1,601,058		11.24	%	50,349		(32,673)		83,022
Total loans	92,306,059		2,166,424		9.39	%	97,446,004		2,115,442		8.68	%	50,982		(50,244)		101,226
TOTAL EARNING ASSETS	147,370,673		3,426,330		9.30	%	145,076,733		3,147,126		8.68	%	279,204		117,248		161,956
Non-interest bearing assets (5)	24,054,067						26,032,881
TOTAL ASSETS	$	171,424,740					$	171,109,614
INTEREST BEARING FUNDING LIABILITIES
Deposits and other customer related accounts:
Interest-bearing demand deposits	$	12,419,797	$	49,875	1.61	%	$	12,470,098	$	44,848	1.44	%	$	5,027	$	(178)	$	5,205
Savings	3,890,971		1,877		0.19	%	4,959,909		3,223		0.26	%	(1,346)		(598)		(748)
Money market	24,868,556		214,939		3.46	%	26,382,035		183,991		2.79	%	30,948		(9,715)		40,663
CDs	20,859,378		260,865		5.00	%	18,164,247		208,177		4.58	%	52,688		32,561		20,127
TOTAL INTEREST-BEARING DEPOSITS	62,038,702		527,556		3.40	%	61,976,289		440,239		2.84	%	87,317		22,070		65,247
Federal funds purchased and securities sold under agreements to repurchase, gross (3)	63,752,588		860,769		5.40	%	50,636,237		675,050		5.33	%	185,719		176,749		8,970
Federal funds purchased and securities sold under agreements to repurchase, netting	(42,098,401)						(33,583,913)
Federal funds purchased and securities sold under agreements to repurchase, net	21,654,187						17,052,324
Trading liabilities	3,911,482		45,507		4.65	%	2,678,681		33,273		4.97	%	12,234		14,224		(1,990)
FHLB advances	2,551,016		28,267		4.43	%	7,697,514		98,435		5.12	%	(70,168)		(58,394)		(11,774)
Other borrowings	40,691,172		581,204		5.71	%	37,032,125		429,448		4.64	%	151,756		45,527		106,229
TOTAL SECURITIES FINANCING ACTIVITIES AND BORROWED FUNDS	68,807,857		1,515,747		8.81	%	64,460,644		1,236,206		7.67	%	279,541		178,106		101,435
TOTAL INTEREST-BEARING FUNDING LIABILITIES	130,846,559		2,043,303		6.25	%	126,436,933		1,676,445		5.30	%	366,858		59,761		307,097
Non-interest bearing liabilities (6)	21,862,060						25,744,838
TOTAL LIABILITIES	152,708,619						152,181,771
Mezzanine equity	2,000,000						1,500,000
STOCKHOLDER’S EQUITY	16,716,121						17,427,843
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	171,424,740					$	171,109,614
NET INTEREST SPREAD (7)					3.05	%					3.38	%
NET INTEREST MARGIN (8)					3.75	%					4.05	%
NET INTEREST INCOME			$	1,383,027					$	1,470,681

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Nine months ended September 30, 2024 and 2023
	2024 (1)						2023 (1)						Interest		Change due to
(dollars in thousands)	Average Balance		Interest		Yield/ Rate(2)		Average Balance		Interest		Yield/ Rate(2)		Increase/(Decrease)		Volume		Rate
Interest-earning deposits	$	12,193,903	$	648,631	7.09	%	$	10,409,463	$	572,074	7.33	%	$	76,557	$	94,632	$	(18,075)
Federal funds sold and securities purchased under resale or similar agreements, gross (3)	54,876,266		2,210,518		5.37	%	51,623,580		1,797,354		4.64	%	413,164		118,165		294,999
Federal funds sold and securities purchased under resale or similar agreements, netting	(43,696,572)						(37,456,177)
Federal funds sold and securities purchased under resale or similar agreements, net	11,179,694						14,167,403
AFS	6,969,297		287,729		5.50	%	6,654,822		199,769		4.00	%	87,960		9,843		78,117
HTM	9,148,384		145,165		2.12	%	9,359,202		139,719		1.99	%	5,446		(2,866)		8,312
Trading securities	11,700,468		414,215		4.72	%	8,371,191		282,479		4.50	%	131,736		117,311		14,425
Other investments	1,331,942		35,304		3.53	%	1,282,981		30,144		3.13	%	5,160		1,186		3,974
TOTAL SECURITIES FINANCING ACTIVITIES, INVESTMENTS AND INTEREST-EARNING DEPOSITS	$	52,523,688	$	3,741,562	9.50	%	$	50,245,062	$	3,021,539	8.02	%	$	720,023	$	338,271	$	381,752
LOANS (4):
C&I	11,144,201		344,926		4.13	%	14,961,759		400,781		3.57	%	(55,855)		(144,994)		89,139
CRE	8,934,259		509,984		7.61	%	8,407,974		462,271		7.33	%	47,713		29,630		18,083
Other commercial loans	7,670,776		306,182		5.32	%	7,432,895		255,535		4.58	%	50,647		8,372		42,275
Multifamily	10,250,016		376,116		4.89	%	10,553,821		377,417		4.77	%	(1,301)		(10,320)		9,019
Total commercial loans	37,999,252		1,537,208		5.39	%	41,356,449		1,496,004		4.82	%	41,204		(117,312)		158,516
Consumer loans:
Residential mortgages	4,734,454		126,678		3.57	%	5,064,592		132,225		3.48	%	(5,547)		(9,195)		3,648
Home equity loans and lines of credit	2,300,922		136,731		7.92	%	2,769,320		152,277		7.33	%	(15,546)		(29,662)		14,116
Total consumer loans secured by real estate	7,035,376		263,409		4.99	%	7,833,912		284,502		4.84	%	(21,093)		(38,857)		17,764
RICs and auto loans	44,543,210		4,353,513		13.03	%	44,525,835		3,988,326		11.94	%	365,187		1,570		363,617
Personal unsecured	3,517,749		287,297		10.89	%	4,462,604		378,035		11.29	%	(90,738)		(79,822)		(10,916)
Other consumer	49,685		2,264		6.08	%	79,181		2,790		4.70	%	(526)		(2,484)		1,958
Total consumer	55,146,020		4,906,483		11.86	%	56,901,532		4,653,653		10.90	%	252,830		(119,593)		372,423
Total loans	93,145,272		6,443,691		9.22	%	98,257,981		6,149,657		8.34	%	294,034		(236,905)		530,939
TOTAL EARNING ASSETS	145,668,960		10,185,253		9.32	%	148,503,043		9,171,196		8.23	%	1,014,057		101,366		912,691
Non-interest bearing assets (5)	24,241,314						26,234,627
TOTAL ASSETS	$	169,910,274					$	174,737,670
INTEREST BEARING FUNDING LIABILITIES
Deposits and other customer related accounts:
Interest-bearing demand deposits	$	12,395,100	$	143,045	1.54	%	$	12,667,901	$	103,584	1.09	%	$	39,461	$	(2,170)	$	41,631
Savings	4,081,153		6,275		0.21	%	5,067,383		5,890		0.15	%	385		(365)		750
Money market	25,009,453		627,713		3.35	%	27,027,192		463,852		2.29	%	163,861		(31,510)		195,371
CDs	20,401,330		768,460		5.02	%	16,335,529		513,170		4.19	%	255,290		142,145		113,145
TOTAL INTEREST-BEARING DEPOSITS	61,887,036		1,545,493		3.33	%	61,098,005		1,086,496		2.37	%	458,997		108,100		350,897
Federal funds purchased and securities sold under agreements to repurchase, gross (3)	63,979,450		2,589,950		5.40	%	54,135,129		2,012,023		4.96	%	577,927		388,425		189,502
Federal funds purchased and securities sold under agreements to repurchase, netting	(43,696,572)						(34,362,894)
Federal funds purchased and securities sold under agreements to repurchase, net	20,282,878						19,772,235
Trading liabilities	3,678,059		129,342		4.69	%	3,245,920		102,964		4.23	%	26,378		14,518		11,860
FHLB advances	3,709,297		135,693		4.88	%	7,400,964		279,000		5.03	%	(143,307)		(135,224)		(8,083)
Other borrowings	39,862,951		1,621,015		5.42	%	37,837,815		1,218,366		4.29	%	402,649		68,007		334,642
TOTAL SECURITIES FINANCING ACTIVITIES AND BORROWED FUNDS	67,533,185		4,476,000		8.84	%	68,256,934		3,612,353		7.06	%	863,647		335,726		527,921
TOTAL INTEREST-BEARING FUNDING LIABILITIES	129,420,221		6,021,493		6.20	%	129,354,939		4,698,849		4.84	%	1,322,644		443,826		878,818
Non-interest-bearing liabilities (6)	22,380,568						26,817,620
TOTAL LIABILITIES	151,800,789						156,172,559
Mezzanine equity	2,000,000						895,258
STOCKHOLDER’S EQUITY	16,109,485						17,669,853
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	169,910,274					$	174,737,670
NET INTEREST SPREAD (7)					3.12	%					3.39	%
NET INTEREST MARGIN (8)					3.81	%					4.02	%
NET INTEREST INCOME			$	4,163,760					$	4,472,347

(1)Average balances are based on daily averages when available. When daily averages are unavailable, mid-month averages are substituted.

(2)Yields calculated using taxable equivalent net interest income.

(3)Represents the average gross Securities Financing Activities balance, including activity that qualifies for balance sheet netting, as discussed further in Note 11 to these Condensed Consolidated Financial Statements.

(4)Interest on loans includes amortization of premiums and discounts on purchased loan portfolios and amortization of deferred loan fees, net of origination costs. Average loan balances include non-accrual loans and LHFS.

83

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

(5)Includes allowance for loan losses and Other assets including leases, goodwill and intangibles, premise and equipment, net deferred tax assets, equity method investments, BOLI, accrued interest receivable, derivative assets, miscellaneous receivables, prepaid expenses and MSRs. Refer to Note 6 to the Condensed Consolidated Financial Statements for further discussion.

(6)Includes Non-interest-bearing deposits and Other liabilities primarily including accounts payable and accrued expenses, derivative liabilities, net deferred tax liabilities and the unfunded lending commitments liability.

(7)Represents the difference between the yield on total earning assets and the cost of total funding liabilities on a managed basis.

(8)Represents annualized, taxable equivalent net interest income divided by average interest-earning assets.

.

NET INTEREST INCOME

Net interest income decreased $87.7 million and decreased $308.6 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. The most significant factors contributing to these changes were as follows:

•Interest income on loans increased $51.0 million and increased $294.0 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. The three-month period change is attributable to a decrease in average loan volume of $50.2 million and an increase in average rates of $101.2 million. The nine-month period change is attributable to a decrease in average loan volume of $236.9 million and an increase in average rates of $530.9 million. Refer to the discussion of changes in loan balances in the "Loan Portfolio" section of this MD&A. The increases are also attributable to interest rate increases.

•Interest income on interest-earning deposits increased $3.6 million and increased $76.6 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. The three-month period change is attributable to an increase in average interest-bearing deposits volume of $15.4 million and a decrease in average rates of $11.8 million. The nine-month period change is attributable to an increase in average interest-bearing deposits volume of $94.6 million and a decrease in average rates of $18.1 million.

•Interest and fees on federal funds sold and securities purchased under resale agreements or similar arrangements increased $148.0 million and increased $413.2 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. The three-month period change is attributable to an increase in average federal funds sold and securities purchased under resale agreements or similar arrangements volume of $77.9 million and an increase in average rates of $70.1 million. The nine-month period change is attributable to an increase in average federal funds sold and securities purchased under resale agreements or similar arrangements volume of $118.2 million and an increase in average rates of $295.0 million.

•Interest income on investment securities increased $76.7 million and increased $230.3 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. The three-month period change is attributable to an increase in average investment securities volume of $51.4 million and an increase in average rates of $25.3 million. The nine-month period change is attributable to an increase in average investment securities volume of $125.5 million and an increase in average rates of $104.8 million. These changes are primarily driven by an increase in interest rates during the year.

•Interest expense on deposits and related customer accounts increased $87.3 million and increased $459.0 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. The three-month period change is attributed to an increase in average interest-bearing deposit volume of $22.1 million and an increase in average rates of $65.2 million. The nine-month period change is attributable to an increase in average interest-bearing deposit volume of $108.1 million and an increase in average rates of $350.9 million. The increase in average rates is primarily attributable to money market and CD products.

•Interest expense on Securities Financing Activities and borrowed funds increased $279.5 million and increased $863.6 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. The three-month period change is attributable to an increase in average Securities Financing Activities and borrowed funds volume of $178.1 million and an increase in average rates of $101.4 million. The nine-month period change is attributable to an increase in average Securities Financing Activities and borrowed funds volume of $335.7 million and an increase in average rates of $527.9 million. Both changes were mostly attributable to an increase in Securities Financing Activities.

84

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

CREDIT LOSS EXPENSE (BENEFIT)

The Company had credit loss expense of $431.3 million and $1.3 billion for the three months and nine months ended September 30, 2024, respectively, compared to a credit loss expense of $856.3 million and $1.6 billion for the corresponding periods in 2023. The credit loss expense during the three months and nine months ended September 30, 2024 was mainly due to RICs and personal unsecured loan charge-offs, partially offset by the decrease in ACL driven by improvement in the macroeconomic outlook for certain macro variables, seasonally expected lower delinquencies in RICs and auto loans, sale of certain personal unsecured loans and off-balance sheet securitizations of RICs and auto loans.

Credit loss expense on commercial loans decreased $37.5 million and decreased $76.7 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023, primarily driven by improved macroeconomic outlook for certain micro variables and lower exposure, partially offset by rating downgrades in the Multifamily portfolio and the Dealer Floor Plan portfolio.

Credit loss expense on consumer loans decreased $393.7 million and decreased $211.6 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023, primarily driven by release in reserves due to the sale of certain personal unsecured loans and off-balance sheet securitizations of RICs and auto loans. Net charge-offs on the consumer loan portfolios decreased $21.4 million and increased $225.5 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023, as current year activity reflects normalization in credit performance post-pandemic. In addition, there has been an increase in net charge-offs in the personal unsecured loan portfolio because of high borrowing costs and persistent inflation.

The credit loss expense on unfunded credit losses for the three months and nine months ended September 30, 2024 increased $6.2 million and decreased $1.6 million compared to the corresponding periods in 2023.

NON-INTEREST INCOME

	Three months ended September 30,				Nine months ended September 30,				QTD Change				YTD Change
(dollars in thousands)	2024		2023		2024		2023		Dollar increase/(decrease)		Percentage		Dollar increase/(decrease)		Percentage
Consumer fees	$	78,834	$	45,294	$	211,843	$	154,515	$	33,540	74.0	%	$	57,328	37.1	%
Commercial fees	26,114		34,146		73,184		103,756		(8,032)		(23.5)	%	(30,572)		(29.5)	%
Lease income	535,872		617,962		1,688,602		1,866,968		(82,090)		(13.3)	%	(178,366)		(9.6)	%
Capital market revenue	102,075		103,675		316,349		217,561		(1,600)		(1.5)	%	98,788		45.4	%
Miscellaneous income, net	7,099		83,316		264,388		283,705		(76,217)		(91.5)	%	(19,317)		(6.8)	%
Net gains recognized in earnings	55,117		37,048		184,304		108,556		18,069		48.8	%	75,748		69.8	%
Total non-interest income	$	805,111	$	921,441	$	2,738,670	$	2,735,061	$	(116,330)	(12.6)	%	$	3,609	0.1	%

Total non-interest income decreased $116.3 million and increased $3.6 million for the three months and nine months ended September 30, 2024 compared to the corresponding periods in 2023. These changes were primarily comprised of:

•Consumer fees increased $33.5 million and $57.3 million for the three months and nine months ended September 30, 2024 compared to the corresponding periods in 2023, primarily due to an increase in consumer loan fees, increase in consumer deposit fees, and an increase in insurance investment fees. .

•Lease income decreased $82.1 million and $178.4 million for the three months and nine months ended September 30, 2024 compared to the corresponding periods in 2023, primarily due to less active leased vehicle units.

•Capital market revenue decreased $1.6 million and increased $98.8 million for the three months and nine months ended September 30, 2024 compared to the corresponding periods in 2023, primarily due to an increase in underwriting fees.

•Miscellaneous income, net decreased $76.2 million and $19.3 million for the three months and nine months ended September 30, 2024 compared to the corresponding periods in 2023, discussed further below.

•Net gains recognized in earnings increased $18.1 million and $75.7 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023, primarily due to an increase from trading securities gains during 2024.

85

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Miscellaneous income

	Three months ended September 30,				Nine months ended September 30,				QTD Change				YTD Change
(dollars in thousands)	2024		2023		2024		2023		Dollar increase/(decrease)		Percentage		Dollar increase/(decrease)		Percentage
Mortgage banking income, net	$	15,302	$	784	$	48,599	$	9,624	$	14,518	1,851.8	%	$	38,975	405.0	%
BOLI	15,640		19,389		49,103		49,485		(3,749)		(19.3)	%	(382)		(0.8)	%
Net gain on sale of operating leases	17,494		12,922		61,847		55,296		4,572		35.4	%	6,551		11.8	%
Asset and wealth management fees	73,506		62,523		220,615		185,844		10,983		17.6	%	34,771		18.7	%
Gain/(loss) on sale of non-mortgage loans	(663)		2,058		(2,629)		(8,147)		(2,721)		(132.2)	%	5,518		67.7	%
Other miscellaneous income / (loss), net	(114,180)		(14,360)		(113,147)		(8,397)		(99,820)		(695.1)	%	(104,750)		(1,247.5)	%
Total miscellaneous income	$	7,099	$	83,316	$	264,388	$	283,705	$	(76,217)	(91.5)	%	$	(19,317)	(6.8)	%

Miscellaneous income decreased $76.2 million and $19.3 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. These changes were primarily comprised of:

•An increase in Mortgage banking income, net, led by servicing fees on multi-family portfolio.

•An increase in Asset and wealth management fees, led by higher brokerage income.

•A decrease in Other miscellaneous income / (loss), net driven by the loss on sale of certain loan portfolios, as discussed in Note 3.

86

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

GENERAL, ADMINISTRATIVE AND OTHER EXPENSES

	Three months Ended September 30,				Nine months Ended September 30,				QTD Change				YTD Change
(dollars in thousands)	2024		2023		2024		2023		Dollar increase/(decrease)		Percentage		Dollar increase/(decrease)		Percentage
Compensation and benefits	$	532,890	$	528,465	$	1,600,393	$	1,519,614	$	4,425	0.8	%	$	80,779	5.3	%
Occupancy and equipment expenses	157,017		160,608		473,847		505,226		(3,591)		(2.2)	%	(31,379)		(6.2)	%
Technology, outside services, and marketing expense	196,345		184,168		575,244		523,190		12,177		6.6	%	52,054		9.9	%
Loan expense	87,287		86,729		254,822		276,420		558		0.6	%	(21,598)		(7.8)	%
Lease expense	442,947		479,991		1,334,384		1,455,820		(37,044)		(7.7)	%	(121,436)		(8.3)	%
Other expenses	179,221		123,883		469,325		383,861		55,338		44.7	%	85,464		22.3	%
Total general, administrative and other expenses	$	1,595,707	$	1,563,844	$	4,708,015	$	4,664,131	$	31,863	2.0	%	$	43,884	0.9	%

Total general, administrative and other expenses increased $31.9 million and $43.9 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. The most significant factors contributing to these changes were as follows:

•Technology, outside services, and marketing expense increased $12.2 million and $52.1 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023, due to increasing technology costs related to continued banking system build-outs.

•Lease expense decreased $37.0 million and $121.4 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023, due to lower auto lease volumes resulting in lower depreciation expense.

•Other expenses increased $55.3 million and $85.5 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023, due to increase in regulatory fees and litigation reserves.

INCOME TAX PROVISION

An Income tax benefit of $32.2 million and $74.3 million was recorded for the three months and nine months ended September 30, 2024 compared to a benefit of $147.8 million and $54.9 million for the corresponding periods in 2023. This resulted in an ETR of (20.0)% for the three months ended September 30, 2024 compared to (527.5%) for the corresponding period in 2023. The ETR for the three months ended June 30, 2024 was (13.7)%. The quarter over quarter change is primarily the result of a decrease in the annual forecasted pretax income during the third quarter of 2024.

The ETR for the three months ended September 30, 2024 when compared to the same period in 2023, was directly impacted by (i) increase in forecasted pretax income in 2024 and (ii) a significant increase in electric vehicle tax credits expected to be generated in the fourth quarter 2023.

The Company's ETR in future periods will be affected by the results of operations allocated to the various tax jurisdictions in which the Company operates, any change in income tax laws or regulations within those jurisdictions, and interpretations of income tax regulations that differ from the Company's interpretations by tax authorities that examine tax returns filed by the Company or any of its subsidiaries.

87

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

LINE OF BUSINESS RESULTS

The Company manages its business activities by it six reportable segments, Auto, CBB, C&I, CRE, CIB, and Wealth Management. The tables below reflect certain information by reportable segment and includes additional supplementary information related to consumer activities and commercial activities. The supplementary information is deemed to be useful as it represents a view in how we manage the business and also aligns with how our parent, Santander, manages its business from a global perspective.

Consumer Activities

Consumer activities consist of the Company's Auto and CBB reportable segments.

Three months ended	September 30, 2024						September 30, 2023						Total Consumer Activities
	Auto		CBB		Total Consumer activities		Auto		CBB		Total Consumer Activities		Dollar increase/(decrease)		Percentage
Net interest income	$	907,566	$	360,730	$	1,268,296	$	926,581	$	407,358	$	1,333,939	$	(65,643)	(4.9)	%
Total non-interest income	545,680		(39,004)		$	506,676	623,850		58,682		$	682,532	$	(175,856)	(25.8)	%
Credit loss expense / (benefit)	519,758		(82,681)		$	437,077	782,505		31,789		$	814,294	$	(377,217)	(46.3)	%
Total expenses	771,970		348,303		$	1,120,273	816,512		360,017		$	1,176,529	$	(56,256)	(4.8)	%
Income/(loss) before income taxes	161,518		56,104		$	217,622	(48,586)		74,234		$	25,648	$	191,974	748.5	%
Nine months ended	September 30, 2024						September 30, 2023						Total Consumer Activities
	Auto		CBB		Total Consumer activities		Auto		CBB		Total Consumer Activities		Dollar increase/(decrease)		Percentage
Net interest income	$	2,716,442	$	1,114,655	$	3,831,097	$	2,754,863	$	1,219,442	$	3,974,305	$	(143,208)	(3.6)	%
Total non-interest income	1,721,271		91,604		$	1,812,875	1,924,771		188,389		$	2,113,160	$	(300,285)	(14.2)	%
Credit loss expense	1,347,400		360		$	1,347,760	1,296,120		238,596		$	1,534,716	$	(186,956)	(12.2)	%
Total expenses	2,334,758		1,054,475		$	3,389,233	2,466,643		1,093,160		$	3,559,803	$	(170,570)	(4.8)	%
Income/(loss) before income taxes	755,555		151,424		$	906,979	916,871		76,075		$	992,946	$	(85,967)	(8.7)	%
Total assets	62,094,480		9,891,925		$	71,986,405	62,945,184		12,601,046		$	75,546,230	$	(3,559,825)	(4.7)	%

The Company reported total income before income taxes related to its Consumer activities of $217.6 million and $907.0 million for the three months and nine months ended September 30, 2024, respectively, compared to income before income taxes of $25.6 million and $992.9 million for the corresponding periods in 2023. The most significant drivers of these changes were:

•Total non-interest income for Auto decreased $78.2 million and decreased $203.5 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. These changes were primarily driven by lower lease income as result of lower volumes.

•Credit loss expense in Auto decreased $262.7 million and increased $51.3 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. The increase was driven by higher loan volume and the continued normalization of the net charge-off rate, which was still lower than pre-pandemic levels. The decrease is due to provision releases related to two capital transactions in 2024; partially offset in loss on sale in non-interest income.

•Total non-interest income for CBB decreased $97.7 million and decreased $96.8 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. These changes were primarily driven by loss on sale of a personal unsecured loan portfolio.

•Credit loss expense for CBB decreased $114.5 million and decreased $238.2 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. These changes were primarily driven by lower balances across most consumer portfolios and provision release on the sale of a personal unsecured loan portfolio; partially offset in loss on sale in non-interest income.

•Total assets in CBB at September 30, 2024 there was a decrease of $2.7 billion compared to the corresponding date in 2023. The decreases were driven by lower loan originations, strategic portfolio sale and home mortgage runoff.

88

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Commercial Activities

Commercial activities consists of the Company's C&I reportable segment and CRE reportable segment.

Three months ended	September 30, 2024						September 30, 2023						Total Commercial Activities
	C&I		CRE		Total Commercial Activities		C&I		CRE		Total Commercial Activities		Dollar increase/(decrease)		Percentage
Net interest income	$	92,407	$	121,822	$	214,229	$	80,560	$	115,388	$	195,948	$	18,281	9.3	%
Total non-interest income	17,793		20,933		$	38,726	10,732		8,033		$	18,765	$	19,961	106.4	%
Credit loss expense / (benefit)	(12,676)		15,940		$	3,264	(8,292)		55,864		$	47,572	$	(44,308)	(93.1)	%
Total expenses	50,627		33,381		$	84,008	59,041		34,411		$	93,452	$	(9,444)	(10.1)	%
Income/(loss) before income taxes	72,249		93,434		$	165,683	40,543		33,146		$	73,689	$	91,994	124.8	%
Nine months ended	September 30, 2024						September 30, 2023						Total Commercial Activities
	C&I		CRE		Total Commercial Activities		C&I		CRE		Total Commercial Activities		Dollar increase/(decrease)		Percentage
Net interest income	$	270,197	$	372,898	$	643,095	$	243,623	$	333,455	$	577,078	$	66,017	11.4	%
Total non-interest income	49,541		56,986		$	106,527	38,478		25,682		$	64,160	$	42,367	66.0	%
Credit loss expense / (benefit)	(54,782)		57,376		$	2,594	(13,348)		111,931		$	98,583	$	(95,989)	(97.4)	%
Total expenses	158,410		102,052		$	260,462	180,572		100,919		$	281,491	$	(21,029)	(7.5)	%
Income before income taxes	216,110		270,456		$	486,566	114,877		146,287		$	261,164	$	225,402	86.3	%
Total assets	3,977,854		23,621,631		$	27,599,485	4,871,660		22,488,032		$	27,359,692	$	239,793	0.9	%

The Company reported total income before income taxes related to its Commercial activities of $165.7 million and $486.6 million, for the three months and nine months ended September 30, 2024, respectively, compared to income before income taxes of $73.7 million and $261.2 million for the corresponding periods in 2023. The most significant drivers of these changes were:

•Net interest income in CRE increased $6.4 million and increased $39.4 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods of 2023. The increases were driven by the beneficial interest in the Structured LLC investment with the FDIC.

•Total non-interest income in CRE increased $12.9 million and increased $31.3 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods of 2023. The increases were driven by the servicing fees on the beneficial interest in Structured LLC investment with the FDIC.

•Credit loss expense in CRE had a decrease of $39.9 million and a decrease of $54.6 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods of 2023. These decreases were due higher reserve build in 2023 on CRE office assets.

•Credit loss expense in C&I decreased $4.4 million and decreased $41.4 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods of 2023. These decreases were due to reserve releases related to lower C&I loan balances.

89

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

CIB

	Three months ended September 30				Nine months ended September 30				QTD Change				YTD Change
(dollars in thousands)	2024		2023		2024		2023		Dollar increase/(decrease)		Percentage		Dollar increase/(decrease)		Percentage
Net interest income	$	25,909	$	48,677	$	78,945	$	170,311	$	(22,768)	(46.8)	%	$	(91,366)	(53.6)	%
Total non-interest income	152,849		90,219		502,304		268,014		62,630		69.4	%	234,290		87.4	%
Credit loss expense / (benefit)	(8,344)		(5,258)		(30,443)		(19,391)		(3,086)		(58.7)	%	(11,052)		(57.0)	%
Total expenses	224,781		159,730		629,680		398,206		65,051		40.7	%	231,474		58.1	%
Income/(Loss) before income taxes	(37,679)		(15,576)		(17,988)		59,510		(22,103)		(141.9)	%	(77,498)		(130.2)	%
Total assets	27,474,238		27,502,833		27,474,238		27,502,833		(28,595)		(0.1)	%	(28,595)		(0.1)	%

CIB reported a loss before income taxes of $37.7 million and a loss before income taxes of $18.0 million for the three months and nine months ended September 30, 2024, respectively, compared to a loss before income taxes of $15.6 million and income before income taxes of $59.5 million for the corresponding periods in 2023. Factors contributing to these changes were:

•Net interest income decreased $22.8 million and decreased $91.4 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. The year-to-date decrease was due in part to higher funding costs and decreased loan volumes.

•Total non-interest income increased $62.6 million and increased $234.3 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. These increases were due to increased fee income from the CIB build-out strategy and gains on trading activity.

•Total expenses increased $65.1 million and increased $231.5 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. These increases were due to continued investment costs related to the CIB build out strategy.

Wealth Management

	Three months ended September 30				Nine months ended September 30				QTD Change				YTD Change
(dollars in thousands)	2024		2023		2024		2023		Dollar increase/(decrease)		Percentage		Dollar increase/(decrease)		Percentage
Net interest income	$	53,278	$	66,736	$	167,603	$	210,392	$	(13,458)	(20.2)	%	$	(42,789)	(20.3)	%
Total non-interest income	82,105		66,696		241,848		187,203		15,409		23.1	%	54,645		29.2	%
Credit loss expense / (benefit)	—		205		—		205		(205)		(100.0)	%	(205)		(100.0)	%
Total expenses	70,185		72,911		200,343		208,931		(2,726)		(3.7)	%	(8,588)		(4.1)	%
Income / (Loss) before income taxes	65,198		60,316		209,108		188,459		4,882		8.1	%	20,649		11.0	%
Total assets	8,137,399		7,404,818		8,137,399		7,404,818		732,581		9.9	%	732,581		9.9	%

Wealth Management reported income before income taxes of $65.2 million and $209.1 million for the three months and nine months ended September 30, 2024, respectively, compared to income before income taxes of $60.3 million and $188.5 million for the corresponding periods in 2023. The primary factor contributing to these changes was:

•Net interest income decreased $13.5 million and decreased $42.8 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. These decreases were primarily driven by higher funding costs.

•Total non-interest income increased $15.4 million and increased $54.6 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods in 2023. These increases were primarily driven by additional transaction fees on increased securities transaction activity and higher foreign exchange client activity.

90

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Other

	Three months ended September 30				Nine months ended September 30				QTD Change				YTD Change
(dollars in thousands)	2024		2023		2024		2023		Dollar increase/(decrease)		Percentage		Dollar increase/(decrease)		Percentage
Net interest income	$	(178,685)	$	(174,619)	$	(556,980)	$	(459,739)	$	(4,066)	(2.3)	%	$	(97,241)	(21.2)	%
Total non-interest income	24,755		63,229		75,116		102,524		(38,474)		(60.8)	%	(27,408)		(26.7)	%
Credit loss expense / (benefit)	(658)		(521)		(2,342)		(6,570)		(137)		(26.3)	%	4,228		64.4	%
Total expenses	96,460		61,222		228,297		215,700		35,238		57.6	%	12,597		5.8	%
Income / (Loss) before income taxes	(249,732)		(172,091)		(707,819)		(566,345)		(77,641)		(45.1)	%	(141,474)		(25.0)	%
Total assets	32,821,822		27,839,590		32,821,822		27,839,590		4,982,232		17.9	%	4,982,232		17.9	%

The Other category reported losses before income taxes of $249.7 million and $707.8 million for the three months and nine months ended September 30, 2024, respectively, compared to losses before income taxes of $172.1 million and $566.3 million for the corresponding periods in 2023. The primary factors contributing to these changes were:

•Net interest income decreased $4.1 million and decreased $97.2 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods of 2023. These decreases were mainly due to increased cost of funding.

•Total non-interest income decreased 38.5 million and decreased 27.4 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods of 2023. These decreases were mainly due to prior year gains on swaption derivatives.

•Total expenses increased 35.2 million and increased 12.6 million for the three months and nine months ended September 30, 2024, respectively, compared to the corresponding periods of 2023. These increases were mainly due to increased legal reserves discussed in Note 16.

91

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

FINANCIAL CONDITION

LOAN PORTFOLIO

The Company's LHFI portfolio consisted of the following at the dates indicated:

	September 30, 2024				December 31, 2023				Dollar Increase / (Decrease)		Percent Increase (Decrease)
(dollars in thousands)	Amount		Percent		Amount		Percent
Commercial LHFI:
CRE	$	8,826,084	9.8	%	$	8,747,544	9.4	%	$	78,540	0.9	%
C&I	9,790,851		10.9	%	11,181,962		12.0	%	(1,391,111)		(12.4)	%
Multifamily	9,982,721		11.1	%	10,548,905		11.3	%	(566,184)		(5.4)	%
Other commercial	7,518,806		8.4	%	7,476,113		8.0	%	42,693		0.6	%
Total commercial loans (1)	36,118,462		40.2	%	37,954,524		40.7	%	(1,836,062)		(4.8)	%
Consumer loans secured by real estate:
Residential mortgages	4,519,334		5.0	%	4,816,218		5.2	%	(296,884)		(6.2)	%
Home equity loans and lines of credit	2,169,140		2.4	%	2,448,454		2.6	%	(279,314)		(11.4)	%
Total consumer loans secured by real estate	6,688,474		7.4	%	7,264,672		7.8	%	(576,198)		(7.9)	%
Consumer loans not secured by real estate:
RICs and auto loans	44,929,443		50.2	%	43,705,359		47.0	%	1,224,084		2.8	%
Personal unsecured loans	1,909,725		2.1	%	4,062,700		4.4	%	(2,152,975)		(53.0)	%
Other consumer	40,374		0.1	%	59,954		0.1	%	(19,580)		(32.7)	%
Total consumer loans	53,568,016		59.8	%	55,092,685		59.3	%	(1,524,669)		(2.8)	%
Total LHFI	$	89,686,478	100.0	%	$	93,047,209	100.0	%	$	(3,360,731)	(3.6)	%
Total LHFI with:
Fixed	$	63,041,673	70.3	%	$	65,960,370	70.9	%	$	(2,918,697)	(4.4)	%
Variable	26,644,805		29.7	%	27,086,839		29.1	%	(442,034)		(1.6)	%
Total LHFI	$	89,686,478	100.0	%	$	93,047,209	100.0	%	$	(3,360,731)	(3.6)	%

(1) As of September 30, 2024, the Company had $409.5 million of commercial loans that were denominated in a currency other than the U.S. dollar.

92

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Loans by Maturity and Interest Rate Sensitivity

	At September 30, 2024, Maturing
(in thousands)	In One Year Or Less		One to Five Years		Five to 15 Years		After 15 Years		Total
Fixed Rates:
CRE loans	$	98,942	$	255,516	$	69,641	$	6,987	$	431,086
C&I	78,083		679,661		286,717		8,825		1,053,286
Multifamily loans	578,707		4,152,861		2,506,828		—		7,238,396
Other commercial	696,482		2,001,576		1,108,174		—		3,806,232
Total Commercial	$	1,452,214	$	7,089,614	$	3,971,360	$	15,812	$	12,529,000
Residential mortgages	1,045		30,930		575,063		4,221,956		4,828,994
Home equity loans and lines of credit	17,184		11,294		42,213		27,130		97,821
RICs and auto loans	620,871		25,979,993		18,635,970		12		45,236,846
Personal unsecured loans	34,138		1,161,956		303,565		—		1,499,659
Other consumer	1,136		31,657		3,482		4,100		40,375
Total Fixed Rates	$	2,126,588	$	34,305,444	$	23,531,653	$	4,269,010	$	64,232,695
Variable Rates:
CRE loans	$	3,562,935	$	4,356,628	$	402,551	$	96,589	$	8,418,703
C&I	1,652,175		6,757,664		472,044		26,755		8,908,638
Multifamily loans	831,251		1,537,519		373,929		1,626		2,744,325
Other commercial	3,503,125		209,449		—		—		3,712,574
Total Commercial	$	9,549,486	$	12,861,260	$	1,248,524	$	124,970	$	23,784,240
Residential mortgages	214		3,453		104,593		465,698		573,958
Home equity loans and lines of credit	678		1,448		477,538		1,591,655		2,071,319
Personal unsecured loans	3,765		166,165		239,200		936		410,066
Other consumer	—		—		—		—		—
Total Variable Rates	$	9,554,143	$	13,032,326	$	2,069,855	$	2,183,259	$	26,839,583
Total	$	11,680,731	$	47,337,770	$	25,601,508	$	6,452,269	$	91,072,278

Commercial

Commercial loans decreased approximately $1.8 billion, or 4.8%, from December 31, 2023 to September 30, 2024. This decrease was primarily attributable to a decrease in C&I loans of $1.4 billion and a decrease in Multifamily loans of $566.2 million, partially offset by an increase in CRE loans of $78.5 million.

Consumer Loans Secured By Real Estate

Consumer loans secured by real estate decreased $576.2 million from December 31, 2023 to September 30, 2024. The Company ceased origination of new residential mortgage and home equity loans in the first quarter of 2022.

Consumer Loans Not Secured By Real Estate

RICs and auto loans

RICs and auto loans HFI increased $1.2 billion from December 31, 2023 to September 30, 2024. This increase represents new origination activity, offset by collections and transfers out of HFI in connection with the Company's de-consolidation transactions resulting in off-balance sheet securitization. RICs are collateralized by vehicle titles, and the lender has the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract. A significant portion of the Company's RICs HFI are pledged against warehouse lines or securitization bonds. Refer to further discussion of these in Note 9 to the Condensed Consolidated Financial Statements.

During the third quarter of 2024, the Company transferred its financial interests of approximately $507.7 million on-balance sheet auto RIC Trust to a third party and to a newly-formed off-balance sheet Trust. Refer to Note 7 to these Condensed Consolidated Financial Statements for additional discussion of this transaction.

93

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

During the third quarter of 2024, the Company transferred an additional $307.4 million of auto RICs from LHFI to LHFS in connection with a planned de-consolidation and transfer to an off-balance sheet Trust, resulting in a release of the ACL in the amount of approximately $33.8 million, offset by a mark to fair value loss on securitization of approximately $8.0 million. This transaction was completed in October 2024.

As of September 30, 2024, 58.1% of the Company's RIC and auto loan portfolio balance was comprised of nonprime loans (defined by the Company as customers with a FICO score of below 640) with customers who did not qualify for conventional consumer finance products as a result of, among other things, a lack of or adverse credit history, low income levels and/or the inability to provide adequate down payments. This also includes 6.1% of loans for which no FICO score was available. While underwriting guidelines are designed to establish that the customer would be a reasonable credit risk, nonprime loans will nonetheless experience higher default rates than a portfolio of obligations of prime customers. Additionally, higher unemployment rates, higher gasoline prices, unstable real estate values, re-sets of adjustable rate mortgages to higher interest rates, the general availability of consumer credit, and other factors that impact consumer confidence or disposable income could lead to an increase in delinquencies, defaults, and repossessions, as well as decreased consumer demand for used automobiles and other consumer products, weaken collateral values and increase losses in the event of default. Because of the historical focus for such credit has been predominantly on nonprime consumers, the actual rates of delinquencies, defaults, repossessions, and losses on these loans could be more dramatically affected by a general economic downturn.

The Company's automated originations process for these credits reflects a disciplined approach to credit risk management to mitigate the risks of nonprime customers. The Company's robust historical data on both organically originated and acquired loans provides it with the ability to perform advanced loss forecasting. Each applicant is automatically assigned a proprietary custom score using information such as FICO scores, DTI ratios, LTV ratios, and over 30 other predictive factors, placing the applicant in one of 100 pricing tiers. The pricing in each tier is continuously monitored and adjusted to reflect market and risk trends. In addition to the Company's automated process, it maintains a team of underwriters for manual review, consideration of exceptions, and review of deal structures with dealers.

Personal unsecured and other consumer loans

Personal unsecured and other consumer loans HFI decreased $2.2 billion from December 31, 2023 to September 30, 2024. This decrease was primarily attributable to run-off in the portfolio and the sale of approximately $1.3 billion of personal unsecured loans to a third party. The transaction resulted in a loss on sale of approximately $106.8 million, offset by a release of the ACL in the amount of approximately $101.8 million.

94

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

At September 30, 2024, the CRE and multifamily portfolios included the following:

	As of September 30, 2024
(in thousands)	Balance		Percentage of Total CRE and Multifamily
CRE loans	$	8,826,084	46.9	%
Multifamily loans (1)	9,982,721		53.1	%
Total CRE and multifamily loans	$	18,808,805	100.0	%
CRE loans by type
Multifamily construction	$	3,411,639	18.1	%
Office	1,756,703		9.3	%
Retail	1,141,937		6.1	%
Industrial	1,556,270		8.3	%
Other	959,535		5.1	%
Total	$	8,826,084
(1) Occupied properties

Multifamily lending (occupied and construction) continues to be our focus, representing 71% of the total CRE and multifamily portfolio and 14.9% of total LHFI. Overall, occupancy across the multifamily loan portfolio and our primary markets, such as New York City, continues to be stable. Our construction originations are concentrated to well-established and proven builders and sponsors.

Office CRE loans represent 9.3% of the total CRE and multifamily portfolio and 2% of total LHFI. The Company's office exposure primarily consists of investment grade, single tenants with long leases.

The Company's retail CRE portfolio represents 6.1% of the total CRE and multifamily portfolio and 1% of total LHFI. The retail portfolio is anchored by institutional or investment grade tenants, which have demonstrated recovery following the COVID-19 pandemic.

The Company's CRE and Multifamily portfolios, by state at the date indicated was;

	As of September 30, 2024
(dollars in thousands)	Balance		Percentage of Total CRE and Multifamily
State
New York	$	5,790,433	30.8	%
New Jersey	2,291,093		12.2	%
Texas	1,722,606		9.2	%
Massachusetts	1,556,069		8.3	%
All other states	7,448,604		39.5	%
Total	$	18,808,805	100.0	%

95

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

NON-PERFORMING ASSETS

The following table presents the composition of non-performing assets at the dates indicated:    

	Period Ended						Change
(dollars in thousands)	September 30, 2024			December 31, 2023			Dollar		Percentage
Non-accrual loans:
Commercial:
CRE	$	263,802		$	267,537		$	(3,735)	(1.4)	%
C&I	142,342			143,504			(1,162)		(0.8)	%
Multifamily	195,415			97,228			98,187		101.0	%
Other commercial	6,496			5,621			875		15.6	%
Total commercial loans	608,055			513,890			94,165		18.3	%
Consumer loans secured by real estate:
Residential mortgages	54,252			52,718			1,534		2.9	%
Home equity loans and lines of credit	71,884			86,332			(14,448)		(16.7)	%
Consumer loans not secured by real estate:
RICs and auto loans	2,148,302			2,194,509			(46,207)		(2.1)	%
Personal unsecured loans	2,616			21,267			(18,651)		(87.7)	%
Other consumer	13,959			15,733			(1,774)		(11.3)	%
Total consumer loans	2,291,013			2,370,559			(79,546)		(3.4)	%
Total non-accrual loans	2,899,068			2,884,449			14,619		0.5	%
OREO	19,482			24,246			(4,764)		(19.6)	%
Repossessed vehicles	251,238			265,368			(14,130)		(5.3)	%
Other repossessed assets	23,276			1,666			21,610		1,297.1	%
Total OREO and other repossessed assets	293,996			291,280			2,716		0.9	%
Total non-performing assets	$	3,193,064		$	3,175,729		$	17,335	0.5	%
Past due 90 days or more as to interest or principal and accruing interest	$	11,614		$	7,947		$	3,667	46.1%
Non-performing assets as a percentage of total assets	1.9		%	1.9		%	n/a		n/a

96

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

CREDIT RATIOS

	As of and for the year-to-date ended
(dollars in thousands)	September 30, 2024	December 31, 2023	September 30, 2023
ACL to total loan outstanding	7.3%	7.5%	7.3%
ACL	$6,607,819	$6,992,815	$7,057,324
Total loans outstanding	91,072,278	93,207,327	96,435,750
NPL to total loans outstanding	3.2%	3.1%	2.5%
NPL	$2,899,068	$2,884,449	$2,427,582
Total loans outstanding	91,072,278	93,207,327	96,435,750
ACL to NPL	227.9%	242.4%	290.7%
ACL	$6,607,819	$6,992,815	$7,057,324
NPL	2,899,068	2,884,449	2,427,582
Net charge-offs during the period to average loans outstanding:
Commercial	0.1%	0.2%	0.1%
Net charge-offs / (recoveries) during the period	$30,681	$91,924	$24,648
Average amount outstanding	37,999,252	40,904,656	41,356,449
Consumer	3.0%	3.6%	2.5%
Net charge-offs / (recoveries) during the period	$1,671,884	$2,062,520	$1,446,392
Average amount outstanding	55,146,020	56,837,616	56,901,532

Commercial net charge-offs during the period to average loans increased from September 30, 2023 to September 30, 2024. The increase in net charge-offs was primarily due to deterioration in the portfolio and other factors such as high interest rates and persistent inflation. Consumer net charge-offs during the period to average loans increased from September 30, 2023 to September 30, 2024. This increase was primarily due to current year activity in RICs reflecting normalization in credit performance post pandemic. In addition, there has been an increase in net charge-offs in personal unsecured loans portfolio because of high borrowing costs and persistent inflation.

Commercial

Commercial NPLs increased $94.2 million from December 31, 2023 to September 30, 2024. Commercial NPLs accounted for 1.7% of commercial LHFI at September 30, 2024. The change in commercial NPLs was primarily comprised of an increase of $98.2 million in the Multifamily portfolio, a decrease of $3.7 million in the CRE portfolio and a decrease of $1.2 million in the C&I portfolio. The changes in Multifamily NPLs are primarily driven by the impact of the high interest rate environment on customer appraisals.

Consumer Loans Secured by Real Estate

NPLs in the Consumer loans secured by real estate portfolio decreased year-over-year primarily resulting from the continued run-off of the portfolio. Non-performing Consumer loans secured by real estate in foreclosure were $63.3 million or 50.2% of non-performing consumer loans secured by real estate at September 30, 2024, compared to $67.1 million, or 48.3%, at December 31, 2023.

Consumer Loans Not Secured by Real Estate

RICs

RICs are classified as non-performing when they are more than 60 DPD (i.e., 61 or more DPD) with respect to principal or interest. Except for loans accounted for using the FVO, at the time a loan is placed on non-performing status, previously accrued and uncollected interest is reversed against interest income. When an account is 60 days or less past due, it is returned to performing status and the Company returns to accruing interest on the loan. NPLs in the RIC and auto loan portfolio decreased by $46.2 million from December 31, 2023 to September 30, 2024. Non-performing RICs and auto loans accounted for 4.8% and 5.0% of total RICs and auto loans at September 30, 2024 and December 31, 2023, respectively.

97

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Personal unsecured loans

The accrual of interest on revolving personal loans continues until the loan is charged off. Credit cards are charged off when they are 180 days delinquent or within 60 days after the receipt of notification of the cardholder’s death or bankruptcy. NPLs in the personal unsecured portfolio decreased by $18.7 million from December 31, 2023 to September 30, 2024. Non-performing personal unsecured loans accounted for 0.1% and 0.5% of total personal unsecured loans at September 30, 2024 and December 31, 2023, respectively.

Delinquencies

Early stage delinquency in commercial loans totaled approximately $274.7 million and $201.2 million at September 30, 2024 and December 31, 2023, respectively. Early stage delinquency consumer loans amounted to $5.5 billion and $5.6 billion at September 30, 2024 and December 31, 2023, respectively. Management has included these loans in its evaluation of the Company's ACL and reserved for them during the respective periods.

The Company generally considers an account delinquent when an obligor fails to pay substantially all (defined as 90%) of the scheduled payment by the due date.    Overall, total delinquencies increased by $16.6 million from December 31, 2023 to September 30, 2024. The main driver of this is the increase in past due CRE and Multifamily loans due to portfolio deterioration and rating downgrades, partially offset by a decrease in past due auto loans due to seasonal improvement in payment performance.

Loan Modifications

Loan modifications occur when a borrower is experiencing financial difficulties and the loan is modified with terms that would otherwise not be granted to the borrower. In these cases, the Company agrees to make certain concessions to both meet the needs of customers and maximize its ultimate recovery on the loans. The types of concessions granted are generally interest rate reductions, limitations on accrued interest charged, term extensions, covenant waivers and deferments of principal.

Modified loans are generally placed on nonaccrual status upon modification, unless the loan was performing immediately prior to modification. For most portfolios, modified loans may return to accrual status after a sustained period of repayment performance, as long as the Company believes the principal and interest of the restructured loan will be paid in full. RIC modifications are placed on nonaccrual status when the Company believes repayment under the revised terms is not reasonably assured and, at the latest, when the account becomes more than 60 DPD. RIC modifications are considered for return to accrual when the account becomes 60 days or less past due. To the extent the modified loan is determined to be collateral-dependent, and the source of repayment depends on the operation of the collateral, the loan may be returned to accrual status based on the foregoing parameters. To the extent the modified loan is determined to be collateral-dependent, and the source of repayment depends on disposal of the collateral, the loan may not be returned to accrual status.

The Company evaluates the results of its deferral strategies based upon the amount of cash installments that are collected on accounts after they have been deferred compared to the extent to which the collateral underlying the deferred accounts has depreciated over the same period of time. Based on this evaluation, the Company believes that payment deferrals granted according to its policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio.

Changes in deferral levels do not have a direct impact on the ultimate amount of consumer finance receivables charged-off. However, the timing of a charge-off may be affected if the previously deferred account ultimately results in a charge-off. To the extent deferrals impact the ultimate timing of when an account is charged-off, historical charge-off ratios, and cash flow forecasts used in the determination of the adequacy of the ALLL for loans classified as modified are also impacted. Increased use of deferrals may result in a lengthening of the loss confirmation period, which would increase expectations of credit losses inherent in the portfolio and therefore increase the ALLL and related credit loss expense. Changes in these ratios and periods are considered in determining the appropriate level of the ALLL and related credit loss expense.

98

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Effective January 1, 2023, the Company adopted ASU 2022-02. This guidance removes the specific accounting and disclosure guidance for TDR designations and enhances disclosure requirements related to modifications of receivables made to borrowers experiencing financial difficulty. The Company adopted the new guidance on January 1, 2023 on a modified retrospective basis with a cumulative effect adjustment to retained earnings. The effect of this implementation was an increase in the ACL of approximately $55.2 million, a decrease in retained earnings of approximately $41.4 million and a decrease in deferred tax liabilities of approximately $13.8 million. Refer to Note 3 to the Condensed Consolidated Financial Statements for additional information on modified loans.

During the three months and nine months ended September 30, 2024, the Company provided loan modifications to customers with an amortized cost basis at September 30, 2024 of $799.6 million and $1.5 billion, respectively, compared to $539.9 million and $1.2 billion for the corresponding periods in 2023. Loan modifications primarily consist of payment deferrals in the RIC and auto loan portfolio. The increase in payment deferrals in the RIC and auto loan portfolio during the three months and nine months ended September 30, 2024 compared to the corresponding periods in 2023 was primarily driven by increased demand for payment deferrals, higher loan balances and the use of payment deferrals in place of other loan modification programs.

CREDIT RISK

The risk inherent in the Company’s loan and lease portfolios is driven by credit and collateral quality and is affected by borrower-specific and economy-wide factors such as changes in unemployment, GDP, HPI, CRE price index, used vehicle index, and other factors. In general, there is an inverse relationship between credit quality of transactions and projections of impairment losses so that transactions with better credit quality require a lower expected loss. The Company manages this risk through its underwriting, pricing and credit approval guidelines and servicing policies and practices, as well as geographic and other concentration limits.

The Company's ACL is principally based on various models subject to the Company's Model Risk Management Framework. New models are approved by the Company's Model Risk Management Committee. Models, inputs and documentation are further reviewed and validated at least annually, and the Company completes a detailed variance analysis of historical model projections against actual observed results on a quarterly basis. Required actions resulting from the Company's analysis, if necessary, are governed by its ACL Committee.

To the extent permitted by applicable law, management uses the qualitative framework to exercise judgment about matters that are inherently uncertain and that are not considered by the quantitative framework. These adjustments are documented and reviewed through the Company’s risk management processes. Furthermore, management reviews, updates, and validates its process and loss assumptions on a periodic basis. This process involves an analysis of data integrity, review of loss and credit trends, a retrospective evaluation of actual loss information to loss forecasts, and other analyses.

ACL levels are collectively reviewed for adequacy and approved quarterly. Required actions resulting from the Company's analysis, if necessary, are governed by its ACL Committee. The ACL levels are approved by the Board-level committees quarterly.

ACL

The Company's ACL was $6.6 billion at September 30, 2024, a decrease of $385.0 million from December 31, 2023. The decrease in the ACL was primarily driven by improvement in the macroeconomic outlook for certain macro variables, seasonally expected lower delinquencies in RICs and auto loans, sale of certain personal unsecured loans and off-balance sheet securitizations of RICs and auto loans and lower exposure in personal unsecured loans. The ACL for the consumer segment decreased by $345.3 million, and the ACL for the commercial segment decreased $39.7 million for the period ended September 30, 2024 compared to the period ended December 31, 2023. Refer to the rollforward of the ACL in Note 3 to the Condensed Consolidated Financial Statements.

Reserve for Unfunded Lending Commitments

The reserve for unfunded lending commitments decreased from $60.8 million at December 31, 2023 to $46.4 million at September 30, 2024.

99

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

INVESTMENT SECURITIES

The following table presents the Company's investment portfolio at the dates indicated:

(in thousands)	September 30, 2024		December 31, 2023
Investment securities AFS:
U.S. Treasury securities and government agencies	$	3,193,561	$	3,336,467
FNMA and FHLMC securities	1,929,231		2,038,307
Beneficial Interest in Structured LLC	1,205,775		1,122,510
Other securities (1)	633,953		542,253
Total investment securities AFS	6,962,520		7,039,537
Investment securities HTM:
U.S. government agencies	7,930,634		7,625,337
FNMA and FHLMC securities	1,623,951		1,414,367
Total investment securities HTM	9,554,585		9,039,704
Trading securities	11,302,684		7,967,875
Other investments	1,344,079		1,353,278
Total investment portfolio	$	29,163,868	$	25,400,394

(1) Other securities primarily include corporate debt securities and ABS.

The Company’s AFS investment strategy is to purchase liquid fixed-rate and floating-rate investments to manage the Company's liquidity position and interest rate risk adequately. The Company's AFS investment portfolio consisted of the following at the dates indicated:

	September 30, 2024		December 31, 2023		Change		Percent
(in thousands)	Fair Value		Fair Value
U.S. Treasury securities	$	14,653	$	25,409	$	(10,756)	(42.3)	%
Corporate debt securities	1,203		31,590		(30,387)		(96.2)	%
ABS	632,750		510,663		122,087		23.9	%
Beneficial Interest in Structured LLC	1,205,775		1,122,510		83,265		7.4	%
MBS(1):
GNMA - Residential	2,671,307		2,792,844		(121,537)		(4.4)	%
GNMA - Commercial	507,601		518,214		(10,613)		(2.0)	%
FHLMC and FNMA - Residential	1,841,022		1,949,419		(108,397)		(5.6)	%
FHLMC and FNMA - Commercial	88,209		88,888		(679)		(0.8)	%
Total investments in debt securities AFS	$	6,962,520	$	7,039,537	$	(77,017)	(1.1)	%

(1) The Company’s MBS are either guaranteed as to principal and interest by the issuer or have ratings of “AAA” by S&P and Moody’s at the date of issuance.

The unrealized gain / (loss) position of the AFS investment portfolio

(in thousands)	September 30, 2024		December 31, 2023		Change in unrealized gain/(loss)		Percent
Total unrealized loss	$	(751,763)	$	(886,414)	$	134,651	(15.2)	%
Total unrealized gain	107,360		61		107,299		175900.0	%
Total unrealized gain/(loss) position	$	(644,403)	$	(886,353)	$	241,950	(27.3)	%

The change in unrealized gains is primarily related to the Beneficial Interest in Structured LLC.

100

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The average life of the AFS investment portfolio (excluding certain ABS) at September 30, 2024 was approximately 7.28 years. The average effective duration of the Company's AFS investment portfolio (excluding certain ABS) at September 30, 2024 was approximately 4.69 years. The actual maturities of MBS AFS will differ from contractual maturities because borrowers have the right to prepay obligations without prepayment penalties.

HTM securities are reported at cost and adjusted for amortization of premium and accretion of discount. The Company had 386 investment securities classified as HTM as of September 30, 2024. The following table presents the securities of single issuers (other than obligations of the United States and its political subdivisions, agencies, and corporations) having an aggregate book value in excess of 10% of the Company's stockholder's equity that were held by the Company at September 30, 2024:

	September 30, 2024
(in thousands)	Amortized Cost		Fair Value
FNMA	$	1,759,919	$	1,579,606
FHLMC	2,127,635		1,889,819
GNMA (1)	11,482,025		9,771,928
Total	$	15,369,579	$	13,241,353

(1) Includes U.S. government agency MBS.

GOODWILL

At September 30, 2024, goodwill totaled $2.8 billion and represented 1.6% of total assets and 16.8% of total stockholder's equity. The Company conducted its most recent annual goodwill impairment tests as of October 1, 2023 using generally accepted valuation methods and noted no impairment.

The Company completes a quarterly review for impairment indicators over each of its reporting units, which includes consideration of economic and organizational factors that could impact the fair value of the Company's reporting units. As of the most recent review completed at the end of the third quarter of 2024, the Company did not identify any indicators which resulted in the Company's conclusion that an interim impairment test would be required to be completed.

DEFERRED TAXES AND OTHER TAX ACTIVITY

The Company had a net deferred tax asset balance of $332.0 million at September 30, 2024 (consisting of a federal deferred tax asset balance of $151.3 million and a state deferred tax asset balance of $180.7 million with respect to jurisdictional netting), compared to a net deferred tax asset balance of $150.1 million at December 31, 2023 (consisting of a state deferred tax asset balance of $234.3 million and a federal deferred tax liability balance of $84.2 million). Refer to Note 15 to the Condensed Consolidated Financial Statements for further discussion of the change in deferred tax balances.

101

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

DEPOSITS

The Company reported deposits of $77.5 billion and $77.1 billion at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024, SBNA had $76.5 billion of U.S.-based deposits, including $4.6 billion of deposits from SHUSA affiliates that eliminate in consolidation. Uninsured U.S.-based deposits were $29.3 billion and $26.3 billion at September 30, 2024 and December 31, 2023, respectively, and represented approximately 38% and 35% of all U.S. deposits at September 30, 2024 and December 31, 2023, respectively.

During the third quarter of 2024, SBNA began participating in a network that offers FDIC deposit placement services. This network spreads a customer's large deposit account among interconnected banks to increase the FDIC insurance coverage for that customer and to help the Bank retain the customer and the relationship.

SBNA attracts deposits primarily through its retail branch network located within the Mid-Atlantic and Northeastern areas of the United States, located throughout Pennsylvania, New Jersey, New York, New Hampshire, Massachusetts, Connecticut, Rhode Island, and Delaware, with two locations outside this region in Florida. Many of these deposit customers have more than one bank product including small business loans, middle market, large and global commercial loans, multi-family loans, and auto and other consumer loans. In addition, SBNA obtains deposits through third-party brokerage firms.

The following shows the Company's deposits by business as of September 30, 2024:

	Consumer (1)		Commercial (2)		CIB		Wealth Management		Other and eliminations (3)		Total
(dollars in thousands)	Balance
Interest-bearing demand deposits	$	39,015,321	$	10,048,506	$	4,604,612	$	3,133,298	$	6,123,797	$	62,925,534
Non-interest-bearing demand deposits	8,620,808		3,350,708		96,784		2,508,889		41,744		14,618,933
Total deposits (1)	$	47,636,129	$	13,399,214	$	4,701,396	$	5,642,187	$	6,165,541	$	77,544,467

(1) Consumer consists of deposits related to the Company's Auto and CBB reportable segments.

(2) Commercial consists of deposits related to the Company's C&I and CRE reportable segments.

(3) Other consists of deposits related to certain of the Company's immaterial subsidiaries and corporate treasury deposits.

During the third quarter of 2024, deposits remained stable across our commercial businesses with changes to overall deposit balances being primarily driven by increases in strategic deposits in CIB and wealth management, offset by decreases in consumer and other businesses.

102

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

BANK REGULATORY CAPITAL

The Company’s capital priorities are to support client growth and business investment while maintaining appropriate capital for a range of macroeconomic outcomes.

The Company is subject to the regulations of certain federal, state, and foreign agencies and undergoes periodic examinations by those regulatory authorities. At September 30, 2024 and 2023, based on SBNA’s capital calculations, SBNA was considered well-capitalized under the applicable capital framework. In addition, the Company's capital levels as of September 30, 2024 and 2023, based on the Company’s capital calculations, exceeded the required capital ratios for BHCs.

For a discussion of U.S. Basel III, including the standardized approach and related anticipated future changes to the minimum U.S. regulatory capital ratios, see the section captioned "Regulatory Matters" in this MD&A.

Federal banking laws, regulations and policies also limit SBNA’s ability to pay dividends and make other distributions to the Company. SBNA must obtain prior OCC approval to declare a dividend or make any other capital distribution if, after such dividend or distribution: (1) the Bank's total distributions to SHUSA within that calendar year would exceed 100% of its net income during the year plus retained net income for the prior two years, (2) the Bank would not meet capital levels imposed by the OCC in connection with any order, (3) the Bank has negative retained earnings, or (4) the Bank is not adequately capitalized at the time. The OCC's prior approval would also be required if SBNA were notified by the OCC that it is a problem institution or in troubled condition.

Any dividend declared and paid or return of capital has the effect of reducing capital ratios. Refer to the section captioned "Liquidity and Capital Resources" in this MD&A for discussion of the Company's dividends.

The following schedule summarizes the actual capital ratios of SHUSA and SBNA at September 30, 2024:

	SHUSA
	September 30, 2024		Well-capitalized Requirement		Minimum Requirement
CET1 capital ratio	12.72	%	6.50	%	4.50	%
Tier 1 capital ratio	14.57	%	8.00	%	6.00	%
Total capital ratio	16.67	%	10.00	%	8.00	%
Leverage ratio	9.78	%	5.00	%	4.00	%

	SBNA
	September 30, 2024		Well-capitalized Requirement		Minimum Requirement
CET1 capital ratio	16.91	%	6.50	%	4.50	%
Tier 1 capital ratio	16.91	%	8.00	%	6.00	%
Total capital ratio	18.17	%	10.00	%	8.00	%
Leverage ratio	11.96	%	5.00	%	4.00	%

The Company utilizes fair value hedging strategies to mitigate the risk of unrealized losses in its investments in debt securities AFS. As of December 31, 2023, the Company had $6.7 billion of notional in fair value hedges which decreased to $5.9 billion at September 30, 2024. Refer to the notional and fair value of these hedging instruments in Note 12 to these Condensed Consolidated Financial Statements.

103

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

LIQUIDITY AND CAPITAL RESOURCES

Overall

The Company continues to maintain strong liquidity. Liquidity represents the ability of the Company to obtain cost-effective funding to meet the needs of customers as well as the Company's financial obligations. Factors that impact the liquidity position of the Company include loan origination volumes, loan prepayment rates, the maturity structure of existing loans, core deposit growth levels, CD maturity structure and retention, the Company's credit ratings, investment portfolio cash flows, the maturity structure of the Company's wholesale funding, and other factors. These risks are monitored and managed centrally. The Company's Asset/Liability Committee reviews and approves the Company's liquidity policy and guidelines on a regular basis. This process includes reviewing all available wholesale liquidity sources. The Company also forecasts future liquidity needs and develops strategies to ensure adequate liquidity is available at all times. SHUSA conducts monthly liquidity stress test analyses to manage its liquidity under a variety of scenarios, all of which demonstrate that the Company has ample liquidity to meet its short-term and long-term cash requirements.

Enhanced Monitoring of Liquidity

In addition to its normal monitoring of liquidity, SBNA enhanced monitoring of its liquidity position since the recent financial system market disruption that began in March 2023 and the ensuing market volatility. Additionally, SBNA continues to optimize contingent sources of liquidity. Some of these actions include the pledge of additional loans to the FRB discount window, and the transfer of loans from the discount window to the FHLB in order to receive more favorable discounts. Overall, the available capacity from the FRB and FHLB remained stable throughout and since 2023.

Impact of Changes to Credit Rating on Liquidity and Capital Resources

Changes to the credit ratings of SHUSA, Santander and its affiliates or the Kingdom of Spain could have a material adverse effect on SHUSA's business, including its liquidity and capital resources. The credit ratings of SHUSA have changed in the past and may change in the future, which could impact its cost of and access to sources of financing and liquidity. Any reductions in the long-term or short-term credit ratings of SHUSA would increase its borrowing costs and require it to replace funding lost due to the downgrade, which may include the loss of customer deposits, limit its access to capital and money markets and trigger additional collateral requirements in derivatives contracts and other secured funding arrangements. See further discussion on the impacts of credit ratings actions in the "Economic and Business Environment" section of this MD&A.

Sources of Liquidity

The Company has several sources of funding to meet liquidity requirements, including the core deposit base, liquid investment securities portfolio, ability to acquire large deposits, FHLB borrowings, wholesale deposit purchases, and federal funds purchased, as well as through securitizations in the ABS market and committed credit lines from third-party banks and Santander. In addition, the Company has other sources of funding to meet its liquidity requirements such as dividends and returns of investments from its subsidiaries, short-term investments held by non-bank affiliates, and access to the capital markets.

The specialized consumer financing of RICs requires a significant amount of liquidity to originate and acquire loans and leases and to service debt. The Company funds these operations through its lending relationships with third-party banks, Santander and affiliates, and through securitizations in the ABS market. The Company seeks to issue debt that appropriately matches the cash flows of the assets that it originates. The Company uses liquidity for debt service and repayment of borrowings, as well as for funding loan commitments.

During the nine months ended September 30, 2024, the Company's subsidiaries completed on-balance and off-balance sheet funding transactions totaling approximately $14.0 billion, including CLNs of:

•securitizations on SC's SDART platform for approximately $5.9 billion

•securitizations on SC's DRIVE platform for approximately $2.4 billion

•lease securitizations on SBNA's SBALT platform for approximately $4.0 billion

•issuance of retained bonds for approximately $0.5 billion

•issuance of CLNs for approximately $0.2 billion

•off-balance sheet securitizations on SBNA's SBAT platform for approximately $1.0 billion

104

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Santander provides a liquidity line to SHUSA for the purpose of supporting additional liquidity for SHUSA and its subsidiaries CIB business activities. At September 30, 2024, SHUSA had $4.0 billion in available liquidity on the line, of which it had drawn zero.

Intercompany Borrowings with SHUSA Affiliates

SHUSA provides notes payable and revolving loans and lines to its subsidiaries as needed for the purpose of providing additional liquidity to support business operations at the subsidiary level.

Available Liquidity

As of the periods indicated, the Company and its subsidiaries had the following available liquidity:

	September 30, 2024				June 30, 2024
	Total Capacity	Used	Available		Total Capacity	Used	Available
Cash on deposit at FRB			$	13,290,976			$	10,236,609
Liquidity from released government deposit collateral (1)	2,819,609	—	2,819,609		2,881,548	—	2,881,548
Liquidity from unencumbered securities	2,541,268	—	2,541,268		1,968,218	—	1,968,218
FHLB	16,490,977	2,283,823	14,207,154		16,717,010	2,817,855	13,899,155
FRB:
Discount window	12,819,626	—	12,819,626		12,339,060	—	12,339,060
Total available liquidity			$	45,678,633			$	41,324,590

(1) Includes high quality liquid assets that are encumbered as collateral for uninsured government deposits.

At September 30, 2024, unencumbered highly liquid assets (cash and cash equivalents and investments in debt securities AFS exclusive of securities pledged as collateral) totaled approximately $25.7 billion. This amount represented 33.1% of total deposits at September 30, 2024.

105

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cash, cash equivalents, and restricted cash

	Nine months ended September 30,				YTD Change
(in thousands)	2024		2023			Increase/(Decrease)
Net cash flows from operating activities	$	(1,273,402)	$	409,564		$	(1,682,966)
Net cash flows from investing activities	1,741,095		1,975,456			(234,361)
Net cash flows from financing activities	2,673,420		(2,837,379)			5,510,799

Cash flows from operating activities

Net cash flow from operating activities decreased by $1.7 billion from the nine months ended September 30, 2023 to the nine months ended September 30, 2024, primarily due to the change in net trading activity and an increase in originations and purchases of LHFS, offset by an increase in proceeds from the sales of and collections on LHFS during the nine months ended September 30, 2024.

Cash flows from investing activities

Net cash flow from investing activities decreased by $234.4 million from the nine months ended September 30, 2023 to the nine months ended September 30, 2024, primarily driven by the net change in Securities Financing Activities and an increase in purchases of HTM investment securities, offset by an increase in proceeds from sales of LHFI.

Cash flows from financing activities

Net cash flow from financing activities increased by $5.5 billion from the nine months ended September 30, 2023 to the nine months ended September 30, 2024, primarily driven by the net change in borrowings activity, an increase in deposits activity, and net change in Securities Financing Activities.

See the SCF for further details on the Company's sources and uses of cash.

Credit Facilities

Third-Party Revolving Credit Facilities

Warehouse Lines

The Company's subsidiaries have a credit facility with several banks providing an aggregate commitment of $2.2 billion for the exclusive use of providing short-term liquidity needs to support preferred auto lessor financing. As of September 30, 2024, there was an outstanding balance of $861.2 million on this facility. The facility requires reduced advance rates in the event of delinquency, credit loss, or residual loss ratios, as well as other metrics exceeding specified thresholds.

In addition, the Company's subsidiaries have credit facilities with several banks providing an aggregate commitment of $5.1 billion for the exclusive use of providing short-term liquidity to support core and preferred auto lender financing. As of September 30, 2024, there was an outstanding balance of $1.9 billion on these facilities in the aggregate. These facilities reduced advance rates in the event of delinquency, credit loss, as well as various other metrics exceeding specific thresholds.

Securities Financing Activities

The Company may enter into Securities Financing Activities primarily to deploy the Company’s excess cash and investment positions. Securities Financing Activities are treated as collateralized financings and are included in "Federal funds sold and securities purchased under resale agreements or similar arrangements" and "Federal funds purchased and securities loaned or sold under repurchase agreements" on the Company’s Condensed Consolidated Balance Sheets. Refer to Note 11 to the Condensed Consolidated Financial Statements for additional information about the Company's Securities Financing Activities.

106

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Secured Structured Financings

The Company's subsidiaries' secured structured financings primarily consist of public, SEC-registered securitizations, as well as private securitizations under Rule 144A of the Securities Act, and privately issued amortizing notes. As of September 30, 2024, there were on-balance sheet securitizations outstanding in the market with a cumulative balance of approximately $23.0 billion.

Deficiency and Debt Forward Flow Agreement

In addition to SC's credit facilities and secured structured financings, SC has a flow agreement in place with a third party for charged-off assets. Loans and leases sold under these flow agreements are not on SC's balance sheet.

Off-Balance Sheet Financing

SC agreed to provide SBNA with origination support services in connection with the processing, underwriting, and purchasing of retail loans and leases, all of which are serviced by SC. These loans and leases are on the balance sheet of SBNA.

Uses of Liquidity

The Company uses liquidity for debt service and repayment of borrowings. In addition, our subsidiaries use liquidity for funding loan commitments, satisfying deposit withdrawal requests, supporting underwriting transactions and meeting customer liquidity requirements.

At September 30, 2024, the Company's liquidity to meet debt payments, debt service and debt maturities was in excess of 12 months.

Contractual Obligations and Other Commitments

The Company enters into contractual obligations in the normal course of business as a source of funds for its asset growth and asset/liability management and to meet required capital needs. These obligations require the Company to make cash payments over time.

As of September 30, 2024, the Company had total contractual cash obligations of $91.7 billion, which included FHLB advances, notes payable, other debt obligations, CDs, repurchase agreements, non-qualified pension and post-retirement benefits, and operating leases. Of this amount, approximately $54.6 billion of the total contractual cash obligations is due within one year. In addition, the Company had other commitments of $25.9 billion, which consisted of commitments to extend credit and letters of credit. Of this amount, approximately $7.4 billion of the other commitments is due within one year.

The Company is a party to financial instruments and other arrangements with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and manage its exposure to fluctuations in interest rates. See further discussion on these risks in Note 12 and Note 16 to the Condensed Consolidated Financial Statements.

Dividends, Contributions and Stock Issuances

As of September 30, 2024, the Company had 530,391,043 shares of common stock outstanding.

During the nine months ended September 30, 2024, the Company paid dividends of $250.0 million on its common stock and $132.8 million on its preferred stock.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

ASSET AND LIABILITY MANAGEMENT

Interest Rate Risk

Interest rate risk arises primarily through the Company’s traditional business activities of extending loans and accepting deposits. Many factors, including economic and financial conditions, movements in market interest rates, and consumer preferences, affect the spread between interest earned on assets and interest paid on liabilities. Interest rate risk is managed by the Company's Treasury group and measured by its Market Risk Department, with oversight by the Asset/Liability Committee. In managing interest rate risk, the Company seeks to minimize the variability of net interest income across various likely scenarios, while at the same time maximizing net interest income and the net interest margin. To achieve these objectives, the Treasury group works closely with each business line in the Company. The Treasury group also uses various other tools to manage interest rate risk, including wholesale funding maturity targeting, investment portfolio purchase strategies, asset securitizations/sales, and financial derivatives.

Interest rate risk focuses on managing four elements of risk associated with interest rates: basis risk, repricing risk, yield curve risk and option risk. Basis risk stems from rate index timing differences with rate changes, such as differences in the extent of changes in Federal funds rates compared with the three-month term SOFR. Repricing risk stems from the different timing of contractual repricing, such as one-month versus three-month reset dates, as well as the related maturities. Yield curve risk stems from the impact on earnings and market value resulting from different shapes and levels of yield curves. Option risk stems from prepayment or early withdrawal risk embedded in various products. These four elements of risk are analyzed through a combination of net interest income and balance sheet valuation simulations, shocks to those simulations, and scenario and market value analyses, and the subsequent results are reviewed by management. Several assumptions and models are used to produce these analyses, including assumptions about new business volumes, loan and investment prepayment rates, deposit flows, interest rate curves, economic conditions, and competitor pricing. Certain models use historical data analyses to estimate future customer behavior, such as deposit re-pricing and attrition. Estimates from these models can differ from actual behavior, depending on various factors such as macroeconomic conditions, competitor response, etc.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net Interest Income Simulation Analysis

The Company utilizes a variety of measurement techniques to evaluate the impact of interest rate risk, including simulating the impact of changing interest rates on expected future interest income and interest expense, to estimate the Company's net interest income sensitivity. This simulation is run monthly and includes various scenarios that help management understand the potential risks in the Company's net interest income sensitivity. These various scenarios include parallel, non-parallel, gradual parallel and gradual non-parallel rate shocks applied relative to the implied market-based forward curve, as well as other scenarios that are consistent with quantifying the four measures of risk described above. The shocks below are extended using the parallel scenario and are applied instantaneously to the implied forward curve as of the stated month-end. The 200 basis point down shock has been added as market rates have increased. This set of shocks represents a range of plausible rate shocks, as an instantaneous shock 200 basis points down can be analogous to a gradual ramp-down of 400 basis points over one year. This information is used to develop proactive strategies to ensure that the Company’s risk position remains within SHUSA Board of Directors-approved limits so that future earnings are not significantly adversely affected by future interest rates.

The table below reflects the estimated sensitivity to the Company’s net interest income based on interest rate changes at September 30, 2024 and December 31, 2023:

	The following estimated percentage increase/(decrease) to net interest income would result
If interest rates changed in parallel by the amounts below	September 30, 2024		December 31, 2023
Down 200 basis points	(5.84)	%	(4.14)	%
Down 100 basis points	(2.77)	%	(1.94)	%
Up 100 basis points	2.55	%	1.82	%
Up 200 basis points	5.01	%	3.63	%

MVE Analysis

The Company also evaluates the impact of interest rate risk by utilizing MVE modeling. This analysis measures the present value of all estimated future cash flows of the Company over the estimated remaining life of the balance sheet. MVE is calculated as the difference between the market value of assets and liabilities. The MVE calculation utilizes only the current balance sheet, and therefore does not factor in any future changes in balance sheet size, balance sheet mix, yield curve relationships or product spreads, which may mitigate the impact of any interest rate changes.

Management examines the effect of interest rate changes on MVE. The sensitivity of MVE to changes in interest rates is a measure of longer-term interest rate risk and highlights the potential capital at risk due to adverse changes in market interest rates. The following table discloses the estimated sensitivity to the Company’s MVE at September 30, 2024 and December 31, 2023.

	The following estimated percentage increase/(decrease) to MVE would result
If interest rates changed in parallel by the amounts below	September 30, 2024		December 31, 2023
Down 200 basis points	4.22	%	6.68	%
Down 100 basis points	3.14	%	4.05	%
Up 100 basis points	(4.19)	%	(4.49)	%
Up 200 basis points	(8.54)	%	(8.76)	%

As of September 30, 2024, the Company’s profile reflected an increase of MVE of 3.14% for downward parallel interest rate shocks of 100 basis points and a decrease of 4.19% for upward parallel interest rate shocks of 100 basis points. The asymmetrical sensitivity between a 100 basis point increase and a 100 basis point decrease is due to the negative convexity as a result of the prepayment option embedded in mortgage-related products, the impact of which is not fully offset by the behavior of the funding base (largely NMDs).

In downward parallel interest rate shocks, mortgage-related products’ prepayments increase, their duration decreases, and their market value appreciation is therefore limited. At the same time, with deposit rates remaining at comparatively low levels, the Company cannot effectively transfer interest rate declines to its NMD customers. For upward parallel interest rate shocks, extension risk weighs on a sizable portion of the Company’s mortgage-related products, which are predominantly long-term and fixed-rate; and for larger shocks, the loss in market value is not offset by the change in NMDs.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Limitations of Interest Rate Risk Analyses

Since the assumptions used are inherently uncertain, the Company cannot predict precisely the effect of higher or lower interest rates on net interest income or MVE. Actual results will differ from simulated results due to the timing, magnitude and frequency of interest rate changes, the difference between actual experience and the assumed volume, characteristics of new business, behavior of existing positions, and changes in market conditions and management strategies, among other factors.

Uses of Derivatives to Manage Interest Rate and Other Risks

To mitigate interest rate risk and, to a lesser extent, foreign exchange, equity and credit risks, the Company uses derivative financial instruments to reduce the effects that changes in interest rates may have on net income, the fair value of assets and liabilities, and cash flows.

The Company is subject to price risk through its capital markets and mortgage banking activities. The Company employs various tools to measure and manage price risk in its portfolios. In addition, SHUSA's Board of Directors has established certain limits relative to positions and activities. The level of price risk exposure at any point in time depends on the market environment and expectations of future price and market movements and will vary from period to period.

Management uses derivative instruments to mitigate the impact of interest rate movements on the fair value of certain liabilities, assets and highly probable forecasted cash flows. These instruments primarily include interest rate swaps that have underlying interest rates based on key benchmark indices and forward sale or purchase commitments. The nature and volume of the derivative instruments used to manage interest rate risk depend on the level and type of assets and liabilities on the balance sheet and the risk management strategies for the current and anticipated interest rate environments.

The Company typically retains the servicing rights related to residential mortgage loans that are sold. The majority of the Company's residential MSRs are accounted for at fair value. As deemed appropriate, the Company economically hedges MSRs, using interest rate swaps and forward contracts to purchase MBS. For additional information on MSRs, see Note 13 to the Condensed Consolidated Financial Statements.

The Company uses foreign exchange contracts to manage the foreign exchange risk associated with certain foreign currency-denominated assets and liabilities. Foreign exchange contracts, which include spot and forward contracts, represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date. Exposure to gains and losses on these contracts increase or decrease over their respective lives as currency exchange and interest rates fluctuate. The Company also utilizes forward contracts to manage market risk associated with certain expected investment securities sales.

For additional information on foreign exchange contracts, derivatives and hedging activities, see Note 12 to the Condensed Consolidated Financial Statements.

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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Incorporated by reference from Part I, Item 2, MD&A — "Asset and Liability Management" above.

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act, as of September 30, 2024 (the "Evaluation Date"). Based on this evaluation, our CEO and CFO have concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

Refer to Note 16 to the Condensed Consolidated Financial Statements for SHUSA’s litigation disclosures, which are incorporated herein by reference.

ITEM 1A - RISK FACTORS

The Company is subject to a number of risks potentially impacting its business, financial condition, results of operations, and cash flows. There have been no material changes from the risk factors set forth under Part I, Item 1A, Risk Factors, in the Company's Annual Report on Form 10-K for 2023.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4 - MINE SAFETY DISCLOSURES

None.

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ITEM 5 - OTHER INFORMATION

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act

(Amounts presented as actuals)

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) to the Exchange Act, an issuer is required to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant to certain Executive Orders. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable law.

The following activities are disclosed in response to Section 13(r) with respect to Santander and its affiliates. During the period covered by this report:

•Santander UK holds ten blocked accounts for seven customers that are currently designated by the U.S. under the SDGT sanctions program. Revenues and profits generated by Santander UK on these accounts for the nine months ended September 30, 2024, were negligible relative to the overall profits of Santander.

•Santander Consumer Finance, S.A. holds through its Belgian branch seven blocked correspondent accounts for an Iranian bank that is currently designated by the U.S. under the SDGT sanctions program. The accounts have been blocked since 2008. No revenues or profits were generated by the Belgian branch on these accounts in the nine months ended September 30, 2024.

•Santander Brasil holds three blocked accounts for three customers with domicile in Brazil designated by the U.S. under the SDGT sanctions program. Revenues and profits generated by Santander Brasil on these accounts in the nine months ended September 30, 2024 were negligible relative to the overall profits of Santander.

•Santander also has certain legacy performance guarantees for the benefit of an Iranian bank that is currently designated by the U.S. under the SDGT sanctions program (standby letters of credit to guarantee the obligations, either under tender documents or under contracting agreements, of contractors who participated in public bids in Iran) that were in place prior to April 27, 2007.

In the aggregate, all of the transactions described above resulted in gross revenues and net profits in the nine months ended September 30, 2024 which were negligible relative to the overall revenues and profits of Santander. Santander has undertaken significant steps to withdraw from the Iranian market such as closing its representative office in Iran and ceasing all banking activities therein, including correspondent relationships, deposit-taking from Iranian entities and issuing export letters of credit, except for the legacy transactions described above. Santander is not contractually permitted to cancel these arrangements without either (i) paying the guaranteed amount (in the case of the performance guarantees), or (ii) forfeiting the outstanding amounts due to it (in the case of the export credits). As such, Santander intends to continue to provide the guarantees and hold these assets in accordance with company policy and applicable laws.

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ITEM 6 - EXHIBITS

(3.1)	Amended and Restated Articles of Incorporation of Santander Holdings USA, Inc. (Incorporated by reference to Exhibit 3.1 to Santander Holdings USA, Inc.’s Current Report on Form 8-K filed December 21, 2022) (Commission File Number 001-16581)
(3.2)	Articles of Amendment to the Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 of Santander Holdings USA, Inc.’s Current Report on Form 8-K filed June 15, 2023) (Commission File Number 001-16581)
(3.3)	Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Santander Holdings USA, Inc.’s S-3ASR filed December 15, 2023) (Commission File Number 333-276089)
(3.4)	Bylaws of Santander Holdings USA, Inc. as amended on May 23, 2019 (Incorporated by reference to Exhibit 3.1 of Santander Holdings USA, Inc.’s Current Report on Form 8-K filed May 23, 2019) (Commission File Number 001-16581)
(4.1)	Santander Holdings USA, Inc. has certain debt obligations outstanding. None of the instruments evidencing such debt authorizes an amount of securities in excess of 10% of the total assets of Santander Holdings USA, Inc. and its subsidiaries on a consolidated basis; therefore, copies of such instruments are not included as exhibits to this Quarterly Report on Form 10-Q. Santander Holdings USA, Inc. agrees to furnish copies to the SEC on request.
(31.1)	Chief Executive Officer certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
(31.2)	Chief Financial Officer certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
(32.1)	Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
(32.2)	Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
(101.INS)	Inline XBRL Instance Document (Filed herewith)
(101.SCH)	Inline XBRL Taxonomy Extension Schema (Filed herewith)
(101.CAL)	Inline XBRL Taxonomy Extension Calculation Linkbase (Filed herewith)
(101.DEF)	Inline XBRL Taxonomy Extension Definition Linkbase (Filed herewith)
(101.LAB)	Inline XBRL Taxonomy Extension Label Linkbase (Filed herewith)
(101.PRE)	Inline XBRL Taxonomy Extension Presentation Linkbase (Filed herewith)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		SANTANDER HOLDINGS USA, INC. (Registrant)
Date:	November 6, 2024	/s/ Juan Carlos Alvarez de Soto
		Juan Carlos Alvarez de Soto
		Chief Financial Officer and Senior Executive Vice President
Date:	November 6, 2024	/s/ David L. Cornish
		David L. Cornish
		Chief Accounting Officer, Corporate Controller and Executive Vice President

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